Motor Undervalued car on policy

chrisboy

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A Friend of mine is making a claim for a stolen car, but he mistakenly put the value down as 5000 euro on the policy when the actual value is 7000 euro. Car was never recovered. Will they give him the market value or will they offer him 5k because thats what was originally on the policy. He could get the same car again for 7k, but no chance for 5k..
 
Is this a trick question? Your friend will only get what he insured it for and should have insured it for the correct amount when renewing his insurance, obviously the more you value it the more you pay for the insurance so i presume thats why he under valued his car.
 
When i was renewing my insurance I stated the car value as €22k, believeing that after purchasing it for €24k it would be 'there and thereabouts'. After discussing with the agent, she asked what car it was etc. and when i told her the make and model she informed me that the current insurance book value for the car was €19,500 and that is the maximum they would pay out in the event of a total loss of the vehicle. We may think the car is valued at €x but apparently it's the insurers who hold the final value.
Was a shock to me to see how fast it depreciates.....but it saved me a couple of € on the renewal.
 
Is this a trick question? Your friend will only get what he insured it for and should have insured it for the correct amount when renewing his insurance, obviously the more you value it the more you pay for the insurance so i presume thats why he under valued his car.


Eh no, its not a trick question..

On the online quoting system, there's no difference in the quote for valuing it at 5k to valuing it at 7k..
 
Usually if you overvalue a car the insurance company will only pay you the current market value of the car in case of a claim.
Your friend needs to check carefully the terms of agreement with the policy if the value paid is the value of market replacement or a specific number value. USUALLY the agreement states similar to this "The most we will pay is the market value before the loss but not more than the value in the schedule"

The schedule will be the 5K your friend specified. If this is the case then I think you are stuck with learning a hard lesson.

Otherwise its a very long shot that insurance company will pay more. You could of course try to plead by don;t hold your breath;
1. Get a market value CBG or similar for the car type replacement.
2. Gather information from the company in question; request two dummy quotes online for value of 5000 and 7000 and see what the priemium payment is. If same then your friend may have something of a case to plead.

First though read the agreement to see where you stand preceisely on the value paid.
 
Usually if you overvalue a car the insurance company will only pay you the current market value of the car in case of a claim.
Your friend needs to check carefully the terms of agreement with the policy if the value paid is the value of market replacement or a specific number value. USUALLY the agreement states similar to this "The most we will pay is the market value before the loss but not more than the value in the schedule"

The schedule will be the 5K your friend specified. If this is the case then I think you are stuck with learning a hard lesson.

Otherwise its a very long shot that insurance company will pay more. You could of course try to plead by don;t hold your breath;
1. Get a market value CBG or similar for the car type replacement.
2. Gather information from the company in question; request two dummy quotes online for value of 5000 and 7000 and see what the priemium payment is. If same then your friend may have something of a case to plead.

First though read the agreement to see where you stand preceisely on the value paid.


Thanks Woodie, that seems to be sound advice..
If the car's value is 7k and he put 5k down on the insurance, do you think they'll offer him the full 5k, seeing as its well under the market value or will they try offer him a lower figure again?
 
If he put down 5k and they look at it and see he can get a similar car for 5k. Unless they have a reason to reduce the payment, such as no NCT, etc.
 
If he put down 5k and they look at it and see he can get a similar car for 5k. Unless they have a reason to reduce the payment, such as no NCT, etc.

you wont get a similar car for 5k. Asimilar car would be 7k.
 
Chrisboy im afraid you could get a similar car for 2k less it would probably just have more mileage or be a yer older but its a similar car.

Hard lesson going to be learned, always insure your car, house any valuable to its true value. I am sure your friend new exactly how much his car was worth when he insured it.

Sorry but theres no comeback here they will only pay out what its insured for.
 
Dont think that's quite true, are you suggesting that if he insured it for €9,000, that the Insurance Co. would pay out that amount?


He hasnt insured the car for 9k he insured the car for 5k when its real value is 7k so hes only going to get 5k. If he did insure the car for 9k he would be trying to prove thats its real value was 9k not 7k to the insurance comapny and this can be anything from hes had modifications etc added to it.

Its up to everyone when insuring any type of property car, ring, house whatever to get the right valuation for it. But you cannot under insure something and then say well its worth more so I think I should get more.
 
Thanks Woodie, that seems to be sound advice..
If the car's value is 7k and he put 5k down on the insurance, do you think they'll offer him the full 5k, seeing as its well under the market value or will they try offer him a lower figure again?
Chrisboy, as I said the insurance will pay the market value of the car, that is probably up to but not in excess of the amount in the schedule.
The market value means the market value at the time the car was stolen and not the market value at the time your friend purchased it. So what your friend will be getting is like for like. If their market value is above what it was insured for then probably they will pay the full 5K with your friend having to make up the shortfall.
 
And just to complicate things further as the car (according to your friend) was underinsured by approximately 30% the insurer may only pay out, the market value (to a max of 5000) less 30%.
 
And just to complicate things further as the car (according to your friend) was underinsured by approximately 30% the insurer may only pay out, the market value (to a max of 5000) less 30%.


I dont understand this? If the car was inured for 5k, and market value for the car is 5k, why would they deduct 30%?
 
I dont understand this? If the car was inured for 5k, and market value for the car is 5k, why would they deduct 30%?


Maybe I'm missing something here, but I thought the whole issue was that the market value of the car is 7K and not 5K.
As in your first post:-
chrisboy; said:
A Friend of mine is making a claim for a stolen car, but he mistakenly put the value down as 5000 euro on the policy when the actual value is 7000 euro

Obviously if the market value is 5K and that is what the car was insured at then 5K should be paid out.
 
Maybe I'm missing something here, but I thought the whole issue was that the market value of the car is 7K and not 5K.
As in your first post:-


Sorry, what i should have said is if the car was insured for 5k but the market value was 7k, why would they deduct a further 30% from the 5k?

So what you're saying is because the care shouldve been insured for 7k but actually only was insured for 5k, that the insurance company are only going to pay 3.5k?
 
Sorry, what i should have said is if the car was insured for 5k but the market value was 7k, why would they deduct a further 30% from the 5k?

So what you're saying is because the care shouldve been insured for 7k but actually only was insured for 5k, that the insurance company are only going to pay 3.5k?

More or less.........
Not sure if it applies to motor insurance but it always did to property (real estate) insurance, not 100% sure if it does anymore. So if for example you insure a house for 300K and its real rebuild costs are 400k and that property is razed to the ground, then the underwriters may say that seeing as you under insured the property by 25% then the max they will pay is 300K lest 25% ie. 225K.
 
Hi SparkRite
The examples for underinsurance that I've seen have been that in the case where the house is completely destroyed they pay out the policy amount (300K), but if it is partly destroyed it is then that averaging takes place, so if a fire causes 100K of damage they would only pay out 75K.

I am open to correction.

Sybil
 
Sorry, what i should have said is if the car was insured for 5k but the market value was 7k, why would they deduct a further 30% from the 5k?

So what you're saying is because the care shouldve been insured for 7k but actually only was insured for 5k, that the insurance company are only going to pay 3.5k?

Ask the insurer if the premium rate is the same for values of 5K and 7K. They probably are. Then argue that they should accept the mistake on valuation as there was no material difference gained by underinsuring.

Technically the value on the proposal is the important one. But as it would make no difference, I would argue the toss. If your friend got a good purchase price, ie under the market value, then it's also arguable on that point. Market values are not absolute, and most people aren't experts, they don't have a car saleman's guid in their backpockets. Mileage etc will affect it, so argue this as well.
 
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