Car Insurance - "Replace with New Car" Vs "Agreed Value"

lechuck123 on 28/03/2022 - 18:57

Bought a new car for the first time in my life 12 months ago due to the crazy 2nd hand market prices making it very simliar.

When I got the car insured, I insured it with Coles Insurance. They have a policy where "If we assess your car as a total loss within the first 24 months of its original registration We will: replace your car with a new car of the same make, model and series (subject to availability within Australia)"

Ok that's great, except when the latest renewal came in, I noticed the price of the insurance had jumped by $100 (classic). When playing around with their insurance, I can set the "agreed value" of the car lower than what I'd normally be comfortable with, but it significantly reduces the premium. If I have cover to replace the car with a new car if it's totaled anyway, what's the risk in doing this?

Would they then refuse to increase the value next year?
If it's stolen, they might pay me out the lower amount?
I don't think they'd be able to claim they can't replace the car with a like for like model as it's a CX-5 and MY22 has the same model (although more expensive).

Automotive Car Insurance Insurance

Comments

  • bobbified on 28/03/2022 - 19:32
    +1

    When playing around with their insurance, I can set the "agreed value" of the car lower than what I'd normally be comfortable with, but it significantly reduces the premium. If I have cover to replace the car with a new car if it's totaled anyway, what's the risk in doing this?

    If you set a lower 'Agreed Value', you no longer have the new car replacement cover and the lower 'Agreed Value' is what you'll get if your car is a complete write-off from an accident or theft.

    'Agreed Value' is capitalised because you'll find its definition in the PDS'. The new car replacement cover comes under 'Market Value' cover.

    • AndyC1 on 28/03/2022 - 20:33

      Agreed value is the amount they will pay you and not a cent more and you will have to source the new car and wait and wait and zzzzzz.

      Until the new car market returns to normal I would pay the "new car" replacement premium.

      • lechuck123 on 29/03/2022 - 10:56

        Well it's not one or the other. It's just a flat "replace car with new for the first 24 months". So, that was the question, because I can set the 'agreed value' lower, but still have them replace with a new car.

        • AndyC1 on 29/03/2022 - 11:40

          No, it's one or the other. Go and read the PDS very carefully. 'agreed value' is what they will give you. 'replace car' is they will repalce the car with a new car of the same/better/similar.

  • apple2016 on 28/03/2022 - 22:15

    "Agreed value" can be higher than market value as you can include the accessories /modifications costs etc.

    • FoxJump on 28/03/2022 - 23:12

      Even as market value they'll generally price 50% of the supply cost of your accessories as covered. Or something similar

  • Euphemistic on 29/03/2022 - 07:00
    +3

    Read the fine print - carefully, several times.

  • Adredocto on 29/03/2022 - 09:26
    +1

    Worth noting if they can't find the replacement car within their set time frame you will just receive a payout instead.

    Source: happened to me late last year. Same car 2nd hand was $5k more than brand new (covid surge) so they paid me out. I was insured for market value tho.

    • lechuck123 on 29/03/2022 - 11:00

      Ok. That's worth noting and purely for that just keeping the market value high.

      I've heard it's even worse than it was 12 months ago. When I ordered they would look at "What was on a ship coming to NSW that hadn't already been sold" and you could basically pick from that list.

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