How does the claimed value of the car affect the insurance payout?

[Agent_Smith357]

I probably didn't word that very well.

When I bought my car it was a fixer upper so I told the insurance company it was worth what I paid for it, say £1000. Ive done lots of work to it and a car of similar quality on the market is £2000-3000.

If I have an accident and mine is written off, what will my payout be? Will they use the amount written in my policy or the current market price?

Should I inform them I now think its worth more? And how does this work with 'agreed value' policies?

I've never had to claim before nor have I considered my previous cars worth claiming so this is new to me.

 

[BigglesPiP]

The declared value is not used, if you have a total loss you'll be able to negotiate market value.

What you won't get are the value of undeclared modifications or extras.

 

[Quartz]

Should I inform them I now think its worth more?

Yes. They will do whatever they can to minimise any payout. And it is likely part of your policy that you inform them of modifications.

 

[Agent_Smith357]

The car isn't modified. So what is the point of the declared value ?

 

[Doobedoo]

I queried this when one the phone to some insurance company, he basically said it doesn’t really mean a lot. The insurance industry is a strange one. I still don’t get why me who drives a car worth £1000 tops has to pay the same rate as someone who owns a £30,000 or more car. Who potentially is going to cost the insurance company more? Me writing off a £1000 car or you writing of a £30,000 car.
And yes I know technically my insurance is covering the 3rd party but what if my car and your car is stolen? They pay out £1000 to me and £30,000 for you, yet the policy costs me the same as it does you. It annoys me.

 

[Hades]

The car isn't modified. So what is the point of the declared value ?

So they can use it to lowball you a payout when you need it. e.g. you buy a car in 2016 with a value of £1000 when similar cars are worth £2000. Then in 2020 you make a claim. Most similar cars are now worth £1000 because of depreciation. So they use that to pay you only £500 because your car was worth around half that of similar cars when you bought it. So it must now be worth half of similar cars today.

 

[Screenbeat]

When my car was written off the insurance company sent out a guy to evaluate what the value of the car would have been before the crash. I got a fairly decent payout.

 

[Armageus]

And how does this work with 'agreed value' policies?

Agreed value would be exactly that - whatever you have agreed with the insurer. However in all likelihood you will be paying a higher premium for this in the first place.

The car isn't modified. So what is the point of the declared value ?

Likely just a "sanity check" to make sure you aren't trying to insure e.g. a limited edition model that is worth considerably more, or a modified car. Or it's possibly just a throw back to how the system was.

They pay out £1000 to me and £30,000 for you, yet the policy costs me the same as it does you. It annoys me.

It's more complicated than that. Your £1000 car might be considerably easier to steal, or might be treated with a higher risk factor as you may be considered to drive a £1000 car with less care than a £30,000 car. There's a huge range of hidden ratings that come into play behind the scenes.

So they can use it to lowball you a payout when you need it. e.g. you buy a car in 2016 with a value of £1000 when similar cars are worth £2000. Then in 2020 you make a claim. Most similar cars are now worth £1000 because of depreciation. So they use that to pay you only £500 because your car was worth around half that of similar cars when you bought it. So it must now be worth half of similar cars today.

They don't though. I've unfortunately had 2 cars written off by different insurers, and neither time has my declared value come into it. For one of my cars I just got back a value that likely had come from glasses price guide or similar, the other the insurer actually stated they had looked for cars of similar age/mileage currently available and came back with an average price.

 

[Nasher]

Didn't make a difference for me years ago. Whatever you put they still try to lowball you, then eventually pay out the current market value after you laugh at them down the phone.

For exotic, classic and modified car insurers they handle it a bit differently. They may agree a fixed price and cover any mods. But you'll pay a slightly higher premium.

 

[Doobedoo]

It's more complicated than that. Your £1000 car might be considerably easier to steal, or might be treated with a higher risk factor as you may be considered to drive a £1000 car with less care than a £30,000 car. There's a huge range of hidden ratings that come into play behind the scenes.

What easier to nick than all the key cloning we hear about. I get their is hidden factors but I think I should be rewarded for never claiming on my own insurance ever, never had a car stolen, damaged or damaged anyone else’s. Me driving a £1000 car is a choice, I could like millions of others, get a car on finance but I don’t see the value in it. Don’t get me wrong I’d like a newer, shiner, faster car but I don’t need one.

Just a little rant but I do think it’s not fair on someone like me and no claim bonuses are brilliant upto about 5 years, but after that it becomes negligible.

 

[Brok]

What easier to nick than all the key cloning we hear about. I get their is hidden factors but I think I should be rewarded for never claiming on my own insurance ever, never had a car stolen, damaged or damaged anyone else’s. Me driving a £1000 car is a choice, I could like millions of others, get a car on finance but I don’t see the value in it. Don’t get me wrong I’d like a newer, shiner, faster car but I don’t need one.

Just a little rant but I do think it’s not fair on someone like me and no claim bonuses are brilliant upto about 5 years, but after that it becomes negligible.

because some of the insurers risk isn't that you write your car off, its that you hit someone else and are at fault and the value of that vehicle is out of their control.

 

[Joe T]

Dont forget medical claims form a large part of overall insurance costs. For these the value of the car doesnt matter. Medical bills can be millions for a single claim in some cases.

 

[InvaderGIR]

Dont forget medical claims form a large part of overall insurance costs. For these the value of the car doesnt matter. Medical bills can be millions for a single claim in some cases.

Along with @Doobedoo crashing his £1000 car into someone's £30,000 car costing his insurance a large amount.

As others have said though, it's not just about the value of your car there are loads of factors included in it all.

 

[tom_e]

What easier to nick than all the key cloning we hear about. I get their is hidden factors but I think I should be rewarded for never claiming on my own insurance ever, never had a car stolen, damaged or damaged anyone else’s. Me driving a £1000 car is a choice, I could like millions of others, get a car on finance but I don’t see the value in it. Don’t get me wrong I’d like a newer, shiner, faster car but I don’t need one.

Just a little rant but I do think it’s not fair on someone like me and no claim bonuses are brilliant upto about 5 years, but after that it becomes negligible.

You do get rewarded that's what NCD is for.

 

[Doobedoo]

No worries guys that was just my take on it but I concede I may not be thinking about the whole picture.

 

[Nasher]

You do get rewarded that's what NCD is for.

Allegedly, though it caps at only 5 years and you don't actually get much of a discount

 

[jpaul]

I still don’t get why me who drives a car worth £1000 tops has to pay the same rate as someone who owns a £30,000 or more car.

not my experience, a 2-3yr old newer car - bmw 320i was ~£600 fully comp premium, versus ~£250 on a 10yr old similarly powered 3 series;
ok - the actuaries are probably saying those with the newer car, statistically, drive less safely, or it's more likely to be stolen .. I would think repairs and parts on the newer car would be cheaper

How much does a (AA?) (e)valuation, for an older car cost ?, to have that in your back pocket, if you had to claim.

 

[Nasher]

At 15 years old you can get classic insurance which is peanuts

I guess most cars which get written off or damaged are newer ones. Specifically new BMWs as they apparently have the worst statistics.

 

[Doobedoo]

At 15 years old you can get classic insurance which is peanuts

I guess most cars which get written off or damaged are newer ones. Specifically new BMWs as they apparently have the worst statistics.

It doesn’t quite work like that. I tried to insure my Pulsar as a classic and they were having none of it. I can’t remember the exact response but ultimately it was a no go, although that was a few years ago might be different now but I doubt it.

 

[Agent_Smith357]

Thanks everyone, I'll check out the market prices and give my insurer an update on the value.