01 Jun, 2021
HOW AGREED VALUE IS CALCULATED FOR PRESTIGE CAR INSURANCE
As a specialist underwriter of prestige and classic cars and motorcycles, at Dawes, we understand that each vehicle is as unique as the person who owns and drives it.
That’s why, rather than adopting a one-size-fits-all approach, our prestige car insurance is flexible, in most cases offering our customers the option of insuring with us on either an agreed value or market value basis, says Jon Burrard, senior motor underwriter at Dawes.
“Whether your client wants to insure at market value or agreed value is a matter that you, as their broker should discuss with them, however we find that brand new prestige vehicles or classic vehicles are typically insured on an agreed value basis,” Mr Burrard explains.
How is agreed value calculated?
In the case of new prestige vehicles, the agreed value is typically the purchase price of the vehicle. However, determining an agreed value for a classic vehicle can be more complicated, as these vehicles tend to be more individual and the resale market for them is smaller.
“We go through a stringent process but we’ve been doing this for so long and we’ve got so many vehicles on our books we can usually tell how much a vehicle is worth just by looking at it,” Mr Burrard says.
In order to determine value, the underwriter will request pictures of the interior, exterior, odometer reading and, sometimes, the engine bay of the vehicle, which will then be used to compare the vehicle to others in our database.
Mr Burrard says recent online sales data of vehicles of the same, or similar, makes and models are also consulted along with any recent auction sales, with all of the information gathered used to reach a valuation.
“Being a prestige underwriting agency we tend to go for the higher end of the market range so our clients get the benefit of that,” Mr Burrard adds. “But should the broker or their client disagree with the value determined by the underwriter, they can always request that it be reviewed.”
Adjusting agreed value during the policy term
Mr Burrard says that as prestige and classic vehicles are often being improved or modified, it’s a requirement that Dawes are notified of any changes to the vehicle that would affect its value during the term of insurance.
“If you’ve spent $40,000 or $50,000 putting a supercharger in your Mustang you’re going to want to see that reflected in your insurance cover; however we tend not to increase the value by what has been spent on it,” Mr Burrard says. A common example we use is, if you buy a $5,000 car and add $5,000 worth of performance modifications and $5,000 worth of alloy wheels, that doesn’t mean the car is now $15,000.
In order to make a mid-term adjustment to the agreed value, Dawes will require photos of the changes and paperwork that shows the cost of any modifications or improvements made.
Assessing agreed value at renewal
Upon renewal, Mr Burrard says that Dawes’ underwriters manually reassess the agreed value of each vehicle, checking current valuations in the market before applying depreciation.
“On average, depreciation is around 10 - 15% per year but it can vary between vehicles. There are some vehicles that hold their values quite well, such as top end limited production models of Lamborghinis and Ferraris so we don’t depreciate those values as quickly.”
First class insurance with Dawes
Whether they’re insured on an agreed or market value basis, with Dawes, your client’s prestige and classic cars and bikes are in expert hands. Visit our website or call us on 1300 188 299 to learn more about our first class insurance for first class vehicles.
The content contained on this website is intended for insurance intermediaries only. The insurance products referred to on this website can only be purchased through a broker. Dawes Underwriting Australia Pty Ltd trading as Dawes Motor Insurance (ABN 18 050 289 506, AR No. 342982) (Dawes) is an Authorised Representative of SGUAS Pty Limited (ABN 15 096 726 895, AFSL 234437) (SGUAS) and acts under a binding authority as agent for the insurer of the products, Allianz Australia Insurance Limited (ABN 15 000 122 850, AFSL 234708) (Allianz).
Any advice contained on this website is general advice only and has been prepared without taking into account your client’s individual objectives,financial situation or needs. Before making a decision to purchase the product or to continue to hold the product we recommend that your client consider whether it is appropriate for their circumstances and read the relevant Product Disclosure Statement (PDS) which can be obtained by downloading it from the website.
Steadfast Group Limited (ABN 98 073 659 677) (‘SGL’) has a shareholding in our agency. Some of the brokers we deal with may be SGL subsidiaries or associates. We have access to shared services from SGL. These include (but are not exclusive to): model operating procedures, manuals, legal, technical, HR, compliance, sum insured and product comparison tools; insurance cover placement and claims support; group insurance arrangements; and group purchasing arrangements. These services are funded by SGL, subsidised by SGL or SGL receives a fee for them.