So it’s no surprise that vehicle values are a hot topic at the moment. Anyone who has the same couch-based penchant for surfing car sales sites that I do, knows that COVID has been good for people wanting to sell cars, not so much to buy. In a discussion with a mate who sells high-end prestige and classic vehicles was enlightening – at the height of covid the number of vehicles available for sale on the leading car sales site was half the pre-covid number; it remains pretty much the same today. Supply has been a real issue with the used vehicle market, with less people looking to renew leases or trade a vehicle based on challenged consumer confidence. On the new car end, we have supply challenges with both manufacturing and shipping delays. These issues are now compounded by the Semi-conductor issue, with thousands of vehicles sitting incapacitated – awaiting these critical parts to be able to operate and be delivered. Even some of the most anticipated new vehicles like the 300 are experiencing continued changes and they’ve even stopped taking pre-orders.
So what does this mean to all of us? Well, the old chestnut about people buying 200’s over the last 12 months is a good example. Yes, the 200 is one of the most revered and all-round capable 4×4’s available and they command and have commanded a premium on the second-hand market, even before COVID. This particular model has also experienced a boom based on those who prefer an extra cylinder or two, with droves running to buy up the final brand new examples available. This has now also pushed into the second-hand market – if you can’t get a new one, buy a second-hand one right? This has all resulted in the market value of these vehicles increasing significantly.
In general, it’s a common calamity across all makes and models, this lack of supply has created a bubble in values which means getting your sum insured correct on your insurance policy is all the more important. Of note also, the same sort of supply challenge has been evident with the parts we also love to adorn our fourby’s with, so don’t forget about ensuring that your policy covers the value of all the bells and whistles you have attached along the way. If your total sum insured doesn’t reflect what it would cost you to replace the entire setup, then you could be underinsured where you don’t have to be.
But I’ve just got my renewal and the value has gone down – surely these guys don’t think this is right?
Over the last few months, I’ve seen commentary from people taking offence to the fact that the Agreed Value that was set at the beginning of the policy has changed, so I’d like to clarify things.
An Agreed Value is set for the term of insurance; usually 12 months, and only if you chose to take out an Agreed Value policy as opposed to Market Value. Simplistically, you agree the value with your insurer or insurance agent for the term that you agree to take out an insurance policy. During that period, having an Agreed Value for your vehicle can give you certainty around what you would get paid if the worst were to happen and your vehicle would get deemed a total loss. When you select Market Value, should the worst happen the value is determined at the time of the claim.
Regardless of which option you take, there is depreciation applied, year on year – this is driven by the data house that is utilised, in our case Glasses Guide, who take a market view on what a vehicle is worth and provide guiding ranges for Agreed Values and help in the process of determining Market Value at the time of a claim. But you’re not limited to this – we get calls every single day to this effect and we are happy to take a bespoke approach to valuation – if you feel it’s not fair, as I’ve detailed in this blog I wrote a while back, give us a call and we’ll happily take a look.
Finally, the modifications and accessories – as you all know we do things a little differently to the rest of the market and a key benefit to taking a Club 4X4 Policy is that we insure the value of the mods as part of your Total Sum Insured. The intent is always to get you back to the position you were in before an accident, so you must ask yourself if your total sum insured is enough to do that.
I wonder how long this bubble will last? Any thoughts?
And if you’ve got ideas on how we can do thing better, we always welcome your feedback!