Select to expand quoteshi thouse said..
So out of curiosity I thought I would go down the pathway of researching the market value of our car by going through what is undoubtably the largest online site for the sale of motorcars in Australia with advertisers from both car-yards and private sellers. Now initially in my head and going by the maximum agreed value set by the insurance companies our is valued at about $10k. This is a fairly standard white family vehicle - Toytota Kluger. Anyway I wondered that if this car was written-off could we replace it for $10k and I was surprised to find that any equivalent Kluger - same colour, model, years and kilometres on the clock would cost us around $22k. I got in touch with a number of the major insurance companies to discuss how their actuarists establish this agreed value based on what ever algorithms they use and how our car could only be insured for half of this current market should be write the vehicle off. Each time I was informed that this is the price that is set by their assessors and agreed value is just that, you agree to their value.
So, trying to insure our vehicle at a price that would replace "like for like" seems an implausible option. You would think that such a mainstream vehicle would reflect how valuations occur with most vehicles (short of going to a specialist insurance agent - Shannons or the like (but a Kluger is anything but a Shannons type car)).
Out of interest I though I would throw this one out there to see if it is just the case with others vehicle models and makes, as is seems the age old "market" value principle does not apply anymore.
This is easily solved by insuring at Market Value rather than Agreed Value.
Select to expand quoteRibeye said..shi thouse said..
So out of curiosity I thought I would go down the pathway of researching the market value of our car by going through what is undoubtably the largest online site for the sale of motorcars in Australia with advertisers from both car-yards and private sellers. Now initially in my head and going by the maximum agreed value set by the insurance companies our is valued at about $10k. This is a fairly standard white family vehicle - Toytota Kluger. Anyway I wondered that if this car was written-off could we replace it for $10k and I was surprised to find that any equivalent Kluger - same colour, model, years and kilometres on the clock would cost us around $22k. I got in touch with a number of the major insurance companies to discuss how their actuarists establish this agreed value based on what ever algorithms they use and how our car could only be insured for half of this current market should be write the vehicle off. Each time I was informed that this is the price that is set by their assessors and agreed value is just that, you agree to their value.
So, trying to insure our vehicle at a price that would replace "like for like" seems an implausible option. You would think that such a mainstream vehicle would reflect how valuations occur with most vehicles (short of going to a specialist insurance agent - Shannons or the like (but a Kluger is anything but a Shannons type car)).
Out of interest I though I would throw this one out there to see if it is just the case with others vehicle models and makes, as is seems the age old "market" value principle does not apply anymore.
This is easily solved by insuring at Market Value rather than Agreed Value.
Would be nice if it was that easy....the actuarists they employ are wise people and good with numbers, added to that is a solid marketing team and before you know it, you've parted with your cash by insuring at either Agreed or Market and there is very little between it. Market Value doesn't actually mean it matches the prices you will find in a car yard or CarSales.
Yeah it actually does. Market value is not pre determined, it is what the vehicle is worth to buy in the current market pre accident.
Select to expand quoteCarantoc said..
Agreed Value... ?
Well, if there is one thing we can all agree the value of, then it is the value of Carantoc's contributions to these very forums.....
I wonder what premium Laurie pays for his insurance against the loss to Seabreeze.com.au should Carantoc's quick wit and endearing charisma depart.
One can only shudder at what a heinous outcome that would be, but at least we can all rest assured the likelihood is incredibly low.
Who?
Select to expand quoteRibeye said..
Yeah it actually does. Market value is not pre determined, it is what the vehicle is worth to buy in the current market pre accident.
Yeah nah
Select to expand quoteRibeye said..
Yeah it actually does. Market value is not pre determined, it is what the vehicle is worth to buy in the current market pre accident.
I have no first hand experience myself, but in the case of a friend, his car was stolen and the 'market value' was less than what it was worth to replace the car with one of the same standard. He had to take the insurance company to court and have written reports from his mechanic as to the state of the car, before he finally got what it was really worth.
Select to expand quoteFormulaNova said..Ribeye said..
Yeah it actually does. Market value is not pre determined, it is what the vehicle is worth to buy in the current market pre accident.
I have no first hand experience myself, but in the case of a friend, his car was stolen and the 'market value' was less than what it was worth to replace the car with one of the same standard. He had to take the insurance company to court and have written reports from his mechanic as to the state of the car, before he finally got what it was really worth.
Unbelievably rare for an insurance company to go to court over something as simple as a dispute over the value of a single car. You would have to think there was more to it, it just doesn't make financial sense. To even get to court it would have to be knocked back by IDR and then the ombudsman.
Select to expand quoteshi thouse said..
Exactly that, "agreed value" doesn't mean you actually agree to it. They have an agreed value that is bound by limits, which consistently fall well below and in most cases about half of what can be found in the real market.
Agreed value is the amount that both parties agree on, less excess. They might only offer a maximum agreed value of $20,000 on a car you believe is worth $40,000. Do you know you do in that situation? Don't agree. Don't take out the policy. Find an insurer that will, and if no insurer out there will agree maybe it's just no worth that much. You can also get a valuation done (at your cost) to try and get an insurer to meet your terms. Works very well in the case of rare, vintage etc. I did it recently with a client for a bloody Maloo of all things! Surprised the hell out of me to be honest
Select to expand quoteRibeye said..shi thouse said..
Exactly that, "agreed value" doesn't mean you actually agree to it. They have an agreed value that is bound by limits, which consistently fall well below and in most cases about half of what can be found in the real market.
Agreed value is the amount that both parties agree on, less excess. They might only offer a maximum agreed value of $20,000 on a car you believe is worth $40,000. Do you know you do in that situation? Don't agree. Don't take out the policy. Find an insurer that will, and if no insurer out there will agree maybe it's just no worth that much. You can also get a valuation done (at your cost) to try and get an insurer to meet your terms. Works very well in the case of rare, vintage etc. I did it recently with a client for a bloody Maloo of all things! Surprised the hell out of me to be honest
The problem lies in the terminology "agreed value" and what exactly it means. A fair and true comprehension of the term "agreed value" is a fixed amount that the two parties agree to, that doesn't change, period.
an agreed value as an insurance company presents it is an agreed value at the time a person takes up an insurance policy. Each year there after, the insurance company will drop the "agreed value" to an amount to represent the cars ageing devaluation, which strikes me as how market value works (putting aside collectors items). Im sure most people would be ok with this, if their premium dropped each year to match the devaluation of their car. But it never does, does it? Premiums always rise. You pay more, and you get less. The insurance companies take their cake and eat it too.
the best solution i've seen was from someone on here (can't remember who) At premium time ring them up and cancel the policy. Then hang up, ring them straight back and start a new policy.
Select to expand quoteSubsonic said..Ribeye said..shi thouse said..
Exactly that, "agreed value" doesn't mean you actually agree to it. They have an agreed value that is bound by limits, which consistently fall well below and in most cases about half of what can be found in the real market.
Agreed value is the amount that both parties agree on, less excess. They might only offer a maximum agreed value of $20,000 on a car you believe is worth $40,000. Do you know you do in that situation? Don't agree. Don't take out the policy. Find an insurer that will, and if no insurer out there will agree maybe it's just no worth that much. You can also get a valuation done (at your cost) to try and get an insurer to meet your terms. Works very well in the case of rare, vintage etc. I did it recently with a client for a bloody Maloo of all things! Surprised the hell out of me to be honest
The problem lies in the terminology "agreed value" and what exactly it means. A fair and true comprehension of the term "agreed value" is a fixed amount that the two parties agree to, that doesn't change, period.
an agreed value as an insurance company presents it is an agreed value at the time a person takes up an insurance policy. Each year there after, the insurance company will drop the "agreed value" to an amount to represent the cars ageing devaluation, which strikes me as how market value works (putting aside collectors items). Im sure most people would be ok with this, if their premium dropped each year to match the devaluation of their car. But it never does, does it? Premiums always rise. You pay more, and you get less. The insurance companies take their cake and eat it too.
the best solution i've seen was from someone on here (can't remember who) At premium time ring them up and cancel the policy. Then hang up, ring them straight back and start a new policy.
You are pretty much spot on. However the premium an insurer charges is not only decided by the value of your car. The whole insurance market globally changes in cycles. Cat disasters and the like (COVID business interruption claims for example) can destroy the premium pool and cause insurers to increase premiums. Also the cost of doing business (wages/compliance etc) always increases. One of the biggest factors that drives premiums is interest rates - when the insurers are making good money on all that premium they have collected, the market starts to become very competitive and cheaper.
We are currently experiencing the highest premiums and most conservative underwriting I've seen in my career. For many harder to place risks (I'm talking commercial property assets $10m+ here) you are not choosing which underwriter you want but putting together a case to try and sell it to them.
I know a lot of the direct market insurance companies just rely on the auto renewal process and keep increasing premium and decreasing agreed value (as correctly said above) however they will generally negotiate.
You could also use a broker (disclosure - I am one). They will probably cost slightly more but a good one is worth every dollar.
The cheapest direct insurer is never going to be great in a claim as they are cutting every cost they can to deliver the cheapest product.
I kind of think you are better off not getting insurance on stuff one can afford to lose. I gave up on household contents insurance around twelve years ago when TVs and stuff started plummeting in value. I just thought as stuff gets cheaper both the price of replacement reduces plus the incentive for someone to steal them reduces too. It also will save on the hassles dealing with an insurance company that is not interesting in paying out a fair amount.
So I just have insurance on stuff that is too expensive to replace out of pocket like housing. In regards to cars a new car needs insurance against theft and stuff like that but cars lose their value so quickly its probably better to buy a decent second hand car and get third party insurance.
Is car theft as common as what it was in the 80s and 90s? I remember my parents XE Falcon was stolen from a secure hospital car park. A nurse at the hospital gave her boyfriend access to the car park and he stole the car so they could tour Australia. They were Kiwis. I'd imagine cars from that era are a lot easier to steal than modern cars.
Select to expand quoteRibeye said..Subsonic said..Ribeye said..shi thouse said..
Exactly that, "agreed value" doesn't mean you actually agree to it. They have an agreed value that is bound by limits, which consistently fall well below and in most cases about half of what can be found in the real market.
Agreed value is the amount that both parties agree on, less excess. They might only offer a maximum agreed value of $20,000 on a car you believe is worth $40,000. Do you know you do in that situation? Don't agree. Don't take out the policy. Find an insurer that will, and if no insurer out there will agree maybe it's just no worth that much. You can also get a valuation done (at your cost) to try and get an insurer to meet your terms. Works very well in the case of rare, vintage etc. I did it recently with a client for a bloody Maloo of all things! Surprised the hell out of me to be honest
The problem lies in the terminology "agreed value" and what exactly it means. A fair and true comprehension of the term "agreed value" is a fixed amount that the two parties agree to, that doesn't change, period.
an agreed value as an insurance company presents it is an agreed value at the time a person takes up an insurance policy. Each year there after, the insurance company will drop the "agreed value" to an amount to represent the cars ageing devaluation, which strikes me as how market value works (putting aside collectors items). Im sure most people would be ok with this, if their premium dropped each year to match the devaluation of their car. But it never does, does it? Premiums always rise. You pay more, and you get less. The insurance companies take their cake and eat it too.
the best solution i've seen was from someone on here (can't remember who) At premium time ring them up and cancel the policy. Then hang up, ring them straight back and start a new policy.
You are pretty much spot on. However the premium an insurer charges is not only decided by the value of your car. The whole insurance market globally changes in cycles. Cat disasters and the like (COVID business interruption claims for example) can destroy the premium pool and cause insurers to increase premiums. Also the cost of doing business (wages/compliance etc) always increases. One of the biggest factors that drives premiums is interest rates - when the insurers are making good money on all that premium they have collected, the market starts to become very competitive and cheaper.
We are currently experiencing the highest premiums and most conservative underwriting I've seen in my career. For many harder to place risks (I'm talking commercial property assets $10m+ here) you are not choosing which underwriter you want but putting together a case to try and sell it to them.
I know a lot of the direct market insurance companies just rely on the auto renewal process and keep increasing premium and decreasing agreed value (as correctly said above) however they will generally negotiate.
You could also use a broker (disclosure - I am one). They will probably cost slightly more but a good one is worth every dollar.
The cheapest direct insurer is never going to be great in a claim as they are cutting every cost they can to deliver the cheapest product.
You obviously work in the industry and have a more thorough knowledge of the industry than I do.
My actual experience involved looking into the insurance of my wife's car. The agreed value (and market value was within about $500 of each other) valued the car at between $10.5k and $11.8 k. I contacted a number of the major insurers and all were within a few dollars of each other. When I looked on CarSales at identical cars (model, year, colour, km's.....) the cheapest I could find was $20.5 k. The car....a Toyota Kluger (so certainly not an uncommon vehicle and one in which I was able to get plenty of close comparisons from). So, if this vehicle is written off my sums tell me I will be about $9 k out of pocket. Am I missing something?
Interestingly, I've just had a look at the cost of 3rd party damage insurance for my m/bike. The premium didn't change regardless of whether I opted for $0 or $1000 excess... Never seen that before.
Select to expand quoteBuster fin said..
Interestingly, I've just had a look at the cost of 3rd party damage insurance for my m/bike. The premium didn't change regardless of whether I opted for $0 or $1000 excess... Never seen that before.
The statistics might be a bit chaotic for motorbike TPP. I mean, how much third party property damage occurs in a typical motorbike accident?
The market value of my car would pretty simple to calculate.....how many months left on rego 
Select to expand quoteBuster fin said..
Interestingly, I've just had a look at the cost of 3rd party damage insurance for my m/bike. The premium didn't change regardless of whether I opted for $0 or $1000 excess... Never seen that before.
You've hit the minimum the insurer wants to sell third party cover for, with a bike it would be low anyway as the comprehensive risk isn't that high to begin with.
The third party risk for an insurer of cars and bikes is still significant even if the value of the actual vehicle is low. A $2k ****box can still rear end a Ferrari.
I've seen a claim for a Datsun v Lambo where the Datsun driver didn't take third party cover as it cost him more than the car was worth. Claim was in the vicinity of $200k. Worst part was it was his farm car or something and he did have money behind him, would have ruined him or at least caused some serious distress.
A timely reminder to never drive drunk, your insurance doesn't work. Rear end an S Class and sell your house.
Select to expand quoteMobydisc said..
I kind of think you are better off not getting insurance on stuff one can afford to lose. I gave up on household contents insurance around twelve years ago when TVs and stuff started plummeting in value. I just thought as stuff gets cheaper both the price of replacement reduces plus the incentive for someone to steal them reduces too. It also will save on the hassles dealing with an insurance company that is not interesting in paying out a fair amount.
So I just have insurance on stuff that is too expensive to replace out of pocket like housing. In regards to cars a new car needs insurance against theft and stuff like that but cars lose their value so quickly its probably better to buy a decent second hand car and get third party insurance.
Is car theft as common as what it was in the 80s and 90s? I remember my parents XE Falcon was stolen from a secure hospital car park. A nurse at the hospital gave her boyfriend access to the car park and he stole the car so they could tour Australia. They were Kiwis. I'd imagine cars from that era are a lot easier to steal than modern cars.
Your point on contents insurance is actually really quite sound. I insure my contents but with a high excess as I'm only wanting to cover a complete disaster situation or my wife's jewellery. For around $800 a year in premium I can rest assured that everything I've purchased over time will be replaced if I had a fire or something. I've also bought my wife a few expensive bits and pieces over the years and being sub $10k they don't need to be specified on the policy I have.
Not that long ago she put her rings and a set of earrings in a sunnies case whilst we were at the beach on hols in Broome - came back and thought someone had been through her bag and cleared it out, around $25k all up. Turned out she had left an empty (same brand) sunnies case in her bag and they were there all along, but the point being it was not a holiday ruining event as I just told her we can have them replaced when we get back to Perth.
