Mum has just bought a new car and I'm in the process of helping her find the best value comprehensive insurance online.
Going through the fine print of the PDS, most insurance companies offer a new for old replacement for a new car in the case of a write-off within the first 2 years.
Hence, is there a reason for insuring the new car under an agreed value at all?
no reason to do anything more than market
our agreed values are ~30% above what we paid for our vehicles.
Why?
The extra covers stamp duty, comprehensive insurance, new accessories, tools and other expenses for putting a new vehicle on the road.
Hence, is there a reason for insuring the new car under an agreed value at all?
there is. a new for old replacement means that your mother may get a new vehicle for her old one, while an agreed value may get her a payout above the cost of a replacement vehicle.
So, assume my mum insures under the agreed value. In the case of a write off, my mum has the option to either get a new replacement or get the agreed value paid out to her, correct?
In the case of a write off, my mum has the option to either get a new replacement or get the agreed value paid out to her, correct?
yes. she needs to factor in the total cost of getting the replacement on the road again.
an agreed value may mean that she could get a few $100s or $1000s in spare cash to spend on other stuff.
i can't imagine for a second that an insurer would ever pay out more than the initial new cost of an item (on an item that depreciates in value)
can anyone link to such a case?
can anyone link to such a case?
We can't provide an online link, but can confirm that nrma did payout a claim at an agreed value based on the policy conditions. The payout was ~18% more than the vehicle's value.
ok, no issues with that
OP is talking about the first 2 years of a policy where a replacement car is on offer….or didn't you read the OP?
OP is talking about the first 2 years of a policy where a replacement car is on offer
we just used the nrma quote tool to check australia's best selling suv 2017 model. the tool gave us an agreed value of 14.7% above the full driveaway price. however, the tool may not give a same value for other cheaper vehicles.
Wow - so what's stopping someone buying a $200000 car, insuring it for $230000, driving it for 18months, then having a big stack and pocketing $30k?
Wow - so what's stopping someone buying a $200000 car, insuring it for $230000, then having a big stack and pocketing $30k?
the fine men and women of the nsw police, or in your case the qld police.
http://www.dailymail.co.uk/news/article-4794320/Luxury-car-c…
Those with $200K to spend on a car don't need such shenanigans to make $30K, as they're tax arrangements net them many times that without fuss….
@whooah1979: The insurer would know you are insuring the car at an excess of $30k from year 1. They would be recooperating their costs by charging additional insurance premiums. No theft from insurance at all
OP, you will have this option if you choose to insure under the agreed value OR the market value, if it is available on the insurance policy.
Replacement car benefits (under my Suncorp policy, this could be different under other insurance policies):
- you will get a new car that of a similar make and model
- costs such as stamp duty, ctp, registration, delivery charges
- comp insurance then applies to your replacement car
agreed value v market value
a. Market value:
- In a total loss event (eg when your car is written off), you will have to negotiate with your insurance how much your car is worth.
-Eg insurance says it's worth 20k in 2 years but you think it is worth $22k
b. Agreed value:
-you have more certainty over how much you get paid out
- this could affect your insurance premiums. if you insure for an agreed value under the current value of the car, your premiums will decrease.
-you don't get the additional perks of stamp duty, ctp etc getting paid like under the replacement deal.
the difference between agreed value and market value is almost negligible if you choose a replacement vehicle. IE if you want a replacement vehicle within first 2 years, you don't need to worry about choosing market or argeed value. When your car is 3 years or older, you need to think about this.
Careful insuring it for only market value https://forums.whirlpool.net.au/forum-replies.cfm?t=2658015
I seriously hope she isn't driving around without insurance….
Yikes regarding the Whirlpool post, thank you for sharing. Pity the OP never came back on to clarify what car was it though. A $30k shortfall seems excessive.
I have always insured my car for agreed value, but I have always bought 2nd hand, and like the peace of mind knowing the exact payout I will be getting in the case of a write off.
I guess this question was prompted mainly as it's a new car where there's a new for old in the case of a write off. If it helps, it's a Mazda 3 Maxx. I don't see how the price of a brand new Mazda 3 will vary too much over the next year or 2. Paid cash in full so there isn't any finance involved.
And no, she's only taking delivery of the car on Tuesday. :)
I agree. I can only assume they were one of those people who bought a expensive car that they couldn't afford…
If it doesn't cost anything extra go agreed. The price may vary if they bring out a new shape.
Today, your mum should the dealer and get the VIN and rego number so you can organise insurance BEFORE you leave the dealership.
Always go AGREED
Wrong. In the first 2 years where insurance companies offer new for old replacement, agreed value is a waste.
Swap to agreed value AFTER the 2 year initial 'new for old' period is finished.
Depends what the car is - if you'd bought an FPV GT-F there's little hope they'd find a new replacement for you. If you couldn't have that you might prefer cash. Also market value (as per redbook etc) is much lower than you'd ever find on the market for this type of collectable vehicle, so agreed value is more likely to be closer to the cost of replacing it with a second-hand one.
I'd be very interested in what would happen if someone did write off this type of vehicle, and there was a new replacement available from a dealer at double RRP, which I've seen listed around at some point. Presumably the policy terms would demand that the insurance company purchase the available replacement vehicle at the asking price?
Of course but rare cars are the exception not the rule :)
My Opinion - Sometimes people are overinsuring their used car, when they could get a similar replacement car for a lower value. The only way that they will win in this situation is if the car gets written off. By insuring for the lower replacement value I think that the premium would be less. I have been on this planet for a long time, and have never had a car written off. Also if the car is insured for a higher value, then there is a bigger incentive for the insurer to repair it rather than write it off. Please comment :)
Remember that insurance is not about making a profit or breaking even in the event your car is written off. It's about ensuring you are not financially crippled in the event you car is written off.
Too many people over-insure with massive agreed values when it's really unnecessary. Better to be a safe driver and insure for a smart, considered risk amount rather than over insure expecting your car to be written off and having enough to buy another brand new.
assuming your mum is the first registered owner (ie the car wasn't a demo), then for the 1st 2 years, no reason to do anything more than market