How does the claimed value of the car affect the insurance payout?

Man of Honour
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I once asked my insurance broker why they asked for the value of a car. He said he had no idea because any payout is based solely on the market value. I get the impression they just want to use it as a test of your truthfulness.
 
Soldato
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I doubt if you put 100 grand down for a Fiesta it would make any difference at all, except maybe pump up the premium on comparison sites.
 
Soldato
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Some insurers will pay the minimum of the market value or the car value you have given. Hence it is worth checking your policy terms. Moreover, it's best to just be honest when taking out insurance. The car value itself will have a negligible impact on the overall premium for most people.

The rating structure is never clear cut and will vary by insurer. I'm a commercial actuary and so don't deal with personal lines such as motor but one of my friends is a motor actuary. His company actually charges customers more for saying they park their car on the driveway because that's just what the stats indicated and it turned out a lot of people (moronically) lied about this. This is just one example but there are countless more.

To add to the confusion, interactions will exist in the rating structure too.

You can reverse engineer rating structures by entering every permutation of rating factors into the comparison sites and assessing the impact on premium. However, insurers have twigged onto this and I can imagine measures are in place to prevent it.
 
Soldato
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In my experience they won't pay any more than the value you state even if car raises in value

But they will pay out less if they think the value has dropped.

If it's something like a classic/rare where prices might fluctuate then always get an agreed value
 
Soldato
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What easier to nick than all the key cloning we hear about. I get their is hidden factors but I think I should be rewarded for never claiming on my own insurance ever, never had a car stolen, damaged or damaged anyone else’s. Me driving a £1000 car is a choice, I could like millions of others, get a car on finance but I don’t see the value in it. Don’t get me wrong I’d like a newer, shiner, faster car but I don’t need one.

Just a little rant but I do think it’s not fair on someone like me and no claim bonuses are brilliant upto about 5 years, but after that it becomes negligible.

Your 10 year old £1,000 banger is likely to have less driver assists/safety systems than a brand new £30,000 modern car, meaning you are both more likely to have accidents (e.g. what would be a near miss in something with modern braking system becomes a crash in the older car), and more likely to be injured seriously in them (worse crumple zones, fewer airbags etc.). It's also more likely to be in poor mechanical condition than the newer car, increasing the chance of a sudden failure, potentially resulting in loss of control & an accident.

Obviously you may keep your 10 year old car in pristine condition while the brand new car is driven on bald tyres and constantly bounced off kerbs by someone who has never even heard the word "servicing", but generally speaking, the above will be true, and unfortunately insurance is based on statistics, not individuals.
 
Soldato
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In my experience they won't pay any more than the value you state even if car raises in value

But they will pay out less if they think the value has dropped.

If it's something like a classic/rare where prices might fluctuate then always get an agreed value

Depends who you insure with. Mainstream insurers don't set an agreed value.

Your 10 year old £1,000 banger is likely to have less driver assists/safety systems than a brand new £30,000 modern car, meaning you are both more likely to have accidents (e.g. what would be a near miss in something with modern braking system becomes a crash in the older car), and more likely to be injured seriously in them (worse crumple zones, fewer airbags etc.). It's also more likely to be in poor mechanical condition than the newer car, increasing the chance of a sudden failure, potentially resulting in loss of control & an accident.

Obviously you may keep your 10 year old car in pristine condition while the brand new car is driven on bald tyres and constantly bounced off kerbs by someone who has never even heard the word "servicing", but generally speaking, the above will be true, and unfortunately insurance is based on statistics, not individuals.

There will be far less people crashing classic cars though, so that is a much bigger factor. My old Elise with no airbags or traction control is almost half the price of the gt86.
 
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Soldato
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There will be far less people crashing classic cars though, so that is a much bigger factor. My old Elise with no airbags or traction control is almost half the price of the gt86.

Oh definitely, but then you don't get a 10 year old Elise for £1,000 (unfortunately, or I'd have one on the drive right now :p). Also a lot of classic car insurance tends to have quite a low mileage, which obviously lowers the risk.
 
Soldato
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I would imagine if you put your car value at £500 yet market value is £1000 then they'll find a way to give you £500, right?

Not in my experience. Insurers don't want to be in the salvaged car trade, they especially don't want to be in the bottom of the salvaged car trade. From what I've seen with bangers they usually just offer a fair to good value first time, you accept it then they auction the wreck, minimal admin cost to them. If you do end up having to bargain with them it's usually on higher value stuff where they stand to cover the cost of their own appraiser.
 
Soldato
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I queried this when one the phone to some insurance company, he basically said it doesn’t really mean a lot. The insurance industry is a strange one. I still don’t get why me who drives a car worth £1000 tops has to pay the same rate as someone who owns a £30,000 or more car. Who potentially is going to cost the insurance company more? Me writing off a £1000 car or you writing of a £30,000 car.
And yes I know technically my insurance is covering the 3rd party but what if my car and your car is stolen? They pay out £1000 to me and £30,000 for you, yet the policy costs me the same as it does you. It annoys me.

Liability claims (Third Party Property Damage / Injury) make up between 80%-90% of a motor insurers claims settlements, depends on the insurer and their target customer.
 
Man of Honour
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As mentioned the risk to the insurer is based on a lot more than the value of the car. An old Volvo for example might be low in value and even relatively safe for the driver. What it might not be is particularly safe for third parties who are hit by one.
There also might be inferences made between the value of the vehicle and the likelihood to have an accident. Someone zooming about in a shed might not GAF about being careful, where they park etc. In a car with £30k value (perhaps >£50k when new) people might be a bit more cautious.
 
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Liability claims (Third Party Property Damage / Injury) make up between 80%-90% of a motor insurers claims settlements, depends on the insurer and their target customer.
Part of that though could just be the way insurance is structured meaning people take advantage of it (whiplash claims etc), also the repair industry massively inflate prices because they can.

Anyway I can’t change it so I’ll just carry on accepting it, I take your points on board but I still don’t think it’s fair. I’d prefer to insure my own car to cover my own liability rather than everyone else’s. But I’m an an idealist at the core :rolleyes:.
 
Associate
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I don't think it means anything based on my experience of being crashed into twice. Both times were a write off and the final value was based on them lowballing me and then me negotiating up to a fair market value.
 
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