Agreed Valuations For Insurance Purposes
Your cherished BMW has been stolen or written off and your insurer makes you an offer you CAN refuse! What can you do – What should you have done?
The Club often gets enquiries about this – usually AFTER an accident or when a vehicle has been stolen and the insurer is offering a sum which the owner does not feel properly reflects the value of their car. In such circumstances the club will do what it can to help and has successfully helped many owners increase the pay-out they receive. HOWEVER, this is somewhat shutting the stable door after the horse has bolted and causes everyone involved a degree of stress. Everyone hopes that such incidents do not happen but for peace of mind how much easier it would have been if the value had been agreed with the insurer BEFORE such an incident took place.
Do you need a valuation or not?
As a rule of thumb a valuation is unnecessary for any vehicle one would find for sale at a main dealers as the value is covered from the dealers’/insurers’ bible – Glass’s guide. This is often referred to as the “Market Value” and will reflect values quoted in one of these guides together with the insurance companies view on what similar cars are selling for within a certain distance (say a 25 mile radius) around the owner’s home. Glass’s Guide is not usually available to the general public but the price guides one can find in newsagents give a fairly good guide to values.
However, many club members tend to purchase specialised vehicles from the BMW range that are possibly not so plentiful. These are vehicles that will typically be over 5 years old (but not always), where mileage and condition will start to vary wildly depending on all sorts of circumstances. This will apply to vehicles produced in smaller numbers where there is little trading reference of values for example the Z8. The Alpina and M Power models will also fall into this category especially those registered before the year 2000 with low mileage and/or interesting past history (though not always) these are best valued to provide an impartial third party assessment. However, any car may be the subject of an Agreed Value (E21, E30, E34 etc.) where their condition/mileage are outside the range of a normal Market Value.
From around this 5-year period each vehicle’s ‘uniqueness’ tends to stand out. It could be what is termed ‘a time warp’ i.e. underused and well stored but could also be a restored car or high mileage car that have been kept on the button. Such vehicles generally pass the first ten years slipping down the value chain but a low mileage, low ownership car will always create special interest and values may start to climb – especially those that have received acclaim for being a particularly ‘iconic’ model in its day, for example, the 1930s’ 328, 507, 2002 Turbo, CSL E9, M1, E30 M3 Sport Evo, E36 M3 lightweight, and moving into that zone is the E46 M3 CSL. These may represent the obvious ones but a rising classic will pull up the sister models with it to a greater or lesser degree.
What is an “Agreed Value”?
You may be meeting your legal requirement to insure your vehicle for road use but what happens in the event of making a claim? The insurance company will comply with the terms of the ‘sleep inducing’ document and if at this time you discover that the market value of your car has increased you will be checking to see if your savings could make up the difference before the search starts for a replacement vehicle of similar condition. To place this in context consider the owner of a 1990 E30 M3 Sport Evo whose car was stolen in 2007 without ‘agreed value’ the insurance company were only prepared to settle the claim for the amount he paid for the car a few years earlier i.e. £11,000. The trouble now is that during the 18 month of wrangles the value of this model in comparable condition had risen to £25,000! This is clearly an upset and one that we can all relate! But also one that could so easily and cheaply have been avoided by understanding how ‘these things work’ and taking the necessary steps to protect ones investment. To conclude the theft story, the car was recently found and as no settlement had taken place the car will thankfully be re-joining its rightful owner. However, the intervening period has been a thoroughly miserable time…
OK, so you have taken out insurance and stated a value but it is only at the time of making a claim that the reality of your agreement becomes clear. It would not be the first time that trying to get to grips with pages of the insurance document induces ‘deep sleep’ and so the pages are often slipped into the file unread! It is neither the insurance companies’ responsibility to avail themselves of the up-to-date value of your vehicle – it is the owners! In part the cost of the insurance will be reflected in the sum insured and this is where a valuation from the Club, or a ‘recognized third party’ such as a dealer who regularly trades in the model, will be the requirement of the underwriters from which to obtain ‘an agreed value’.
So what is an Agreed Value? An “Agreed Value” is just that – an amount agreed with the insurer as the money that will be paid out if that car is stolen or written off (subject sometimes to “wear-and-tear” and other factors that may affect the value of a car within a period of insurance). Agreed Values can be provided by this Car Club amongst others.
Statistics will show that premiums are often very low particularly in relationship to the sum insured, and are clear proof that claims are few. Not surprising perhaps, given the modest annual mileage many cover but also that the care and attention lavished shows that owners take pride and responsibility in protecting their investment.
How do I get an Agreed Value?
As mentioned, each model’s condition will be unique and this is where it is vital to identify its ‘uniqueness’ and therefore vital to record visually and in writing all aspects of the car’s life during ownership. Most owners are what might be termed ‘real enthusiasts’ as they have a particular affiliation and have spent time in finding a vehicle that ticks all the boxes. These are vehicles that are ‘keepers’ at least for the foreseeable future. In the main they are not speculators but they are investors in that quite often a considerable amount of money and let’s not forget passion has been outlaid in pursuit of their interest/involvement/hobby.
It is therefore important that the car is recorded in detail by photo. See foot of this page for views required for valuation. By building up a history file full of invoices spent on parts, repairs, restoration, also all MOT certificates to back up mileage claims. When that the vehicle is sold the history file will have the added benefit to possibly increase value (certainly confidence) and therefore be an easier vehicle to sell.
In a fast rising market one has to keep an eye on the changes and make corrections if required, once an agreed value has been documented this price will be the figure paid out so one cannot assume it will cover the car for the annual term! As one can see this is a flexing, changing situation that requires attention if one is to safeguard ones investment. If the market starts to fall (of which there is little sign at present) then it is only fair and reasonable to adjust accordingly and this should be adjusted in the premium paid.
Valuations cost £24.99 for club members and £49.98 for non-members. Payment can be made by cheque to the club office or by debit/credit card by calling the club office. Photos should be sent at the same time. Our valuers should normally get back to you within 6 weeks.
How are valuations arrived at?
There is no exact science but use is made of price guides shown at the rear of magazines such as Classic Cars? I have found these to be mostly below the real market prices and it must be questioned how often these are updated? This is a typical example – ‘Classic Cars’ magazine price guide Jan 2009 – Lotus Mk 1 ‘63-‘64, Mint – £18,000, Average – £10,750, Rough – £6,000. A private sale – dry stored for 20 years sold in January for £20,000 and would need a budget of approx £5-8,000 to recommission the vehicle for the road. Valuers must consider any specific extras fitted such as mirrors, wheels, steering wheel, suspension kits from the likes of Alpina, Schnitzer or Hartge. The value of the car is one thing, these additional items are another, and should be listed with receipts retained. Owners need to be aware that such “enhancements” may add value but they could equally detract from value if the car has moved from its ex-Factory condition in ways that potential purchasers view as non-original. Experience of the model concerned is also important in weighing one car against another of those seen for sale on the internet sites such as piston heads, classiccarsforsale, mobile.de, Classic Car magazines, auction results and from talking to dealers. Once a valuation has been received it is sensible to consider the amount stated and if you believe this to be incorrect one should contact the valuer immediately. It may be that the owner has picked up a trend missed by others…Be aware that underwriters may reject the valuation, it then becomes the responsibility of the valuer to prove their research. I spoke to the owner of the Lotus who had sold the car immediately and confessed that he should have advertised it for more such was the level of response. One could say, therefore, that had this owner used this guide for valuation purposes his Mint Lotus (which he stated on his insurance policy at £18,000) was stolen, he might find that after his pay-out a further £7-10,000 would be needed to replace with a similar car!
Insurers are expecting the Club to base its valuations on their experience of cars in the UK market. Whilst prices overseas MAY affect UK prices this has to be treated carefully as currency fluctuations can appear to change the value of certain models (up or down) simply because of exchange rates for the Euro/Dollar. Sometimes the scarcity of a model will make finding recent UK sales difficult. In these situations the valuer may look overseas to assess the relative sale values over the last 12 months. For example, a car similar to the E30 M3 EVO Sport mentioned above which was selling last year for 40,000 Euros was the next year selling for 60,000 Euros – an increase of 50%. Based on this increase a UK car which last year was valued at £25,000 would now be valued at £37,500.
Valuations will NOT be based on the exchange rate of the Euro/Dollar from year to year. This means that in the example above, what sold at 40,000 Euros was, at an exchange rate of 1.75 Euros that year, “equated to £22,875 whereas with the exchange rate now at around 1.20 Euros to the pound, 60,000 Euros translates into £50,000. The UK car would appear to have doubled in value but part of the increase is solely down to currency exchange rates and for this reason the Club valuation would EXCLUDE any effect of currency fluctuations.
What are the benefits of an Agreed Value?
At the end of the day all one wants to know is in the event of a loss the correct value has been covered by one’s insurance policy. It remains firmly in the lap of the owner to make sure this is adequately documented to avoid any disagreements and therefore in the event of a claim to receive a swift settlement. Agreed Values are just that – values agreed between owner and insurer as to the money that will be paid out in the event of a loss or total write-off. To get your valuation done will cost from just £24.99 through this club. You will be asked to provide a series of photographs and also certain information about your car’s history. The template for this information is shown in the Members’ Area of the club web site. Any thoughts or ideas on this subject would be most welcome – email@example.com
What do you do if you did not have an agreed value?
All is not lost but it is much more of an uphill struggle and sometimes owners find this just too much to deal with although the Club Office will do what it can to guide and assist. Often you will find the person you deal with at the insurance company is a “phone answerer” rather than the person that makes the decision. Firstly you need to get to the decision maker who is normally the Loss Adjuster so please ask to speak to this person BUT beforehand do your homework. Get copies of adverts for similar cars advertised within about 50 miles of your home. Speak with the loss adjuster and STAY REASONABLE – any sense of aggression will stop the process stone dead. Point out that this is the love of your life (your partner may get upset at this point so phone when you are alone!!) and that you just want to replace the car with one of similar condition/age/mileage but that the adverts you have found suggest that rather than £££ you feel it will cost ££££ to replace. Often the loss adjuster will agree somewhat and having asked you to send in the adverts you have found will make you a better offer. One elderly non-member called the Club last year for advice when another driver wrote off their immaculate E30. He had initially been offered £500. We started to help him and he insisted on joining the club. With the Club Office’s assistance he was finally offered £1500 and he was reimbursed the £45 club membership fee by the insurers as “a necessary expense” in resolving the claim.
To download a valuation form, just click on the icon’s below.