Insurance valuation of bikes [Archive]

Icemaestro

8th October 2009, 11:35

How does an insurance company value a bike? Reason I ask is that my Girlfriend's scooter recently got written off, and the insurance company re-valued it at 1750, despite being insured on for 2000.

Now I own a cbr250rr which I have insured for 4k....if by any chance it's written off, is there the liklihood of the insurance company turning around and saying its only worth 2k? Is there anyone who would be able to give me a figure that I should insure it for? I just thought, given for how much they sell at dealers for (6k+) and on trademe (3.5+) that that was a good amount...

Mully

8th October 2009, 12:12

You need an "Agreed Value" policy.

Most insurance companies, in the event of a claim, want to minimise their exposure. They will, therefore, pull a figure out of their collective arses and claim that this is the "Market Value" of the vehicle immediately prior to the accident.

Despite the fact that you wont be able to replace the vehicle with one the same for the pittance they decide it's worth. Which will then make you bitter and twisted with the world, because you're then out of pocket (surely the reason for having insurance) for the difference if you want the same bike again.

It's even worse if you owe money on the vehicle and it's pinched/crashed. The insurance company will pay, say, 75% of the "value" to the finance company, who will then come to you looking for the balance of what they're owed.

BTW, if you insure your bike for $4k and the insurance company decide it's worth $3k, they wont tell you that you only have $3k cover (and therefore lower your premium) until you actually want some money from them. At which point, you get rogered from all sides.

So, yeah. Agreed Value insurance FTW.

scott411

8th October 2009, 12:18

normally with a market price policy they will get a two or three dealers to give valueations and average them, then take off the excess and pay out that figure,

agreed value policies are as they sound,

ital916

8th October 2009, 12:20

The major problem with market value is they dont always ring around your area.

When my rg150 was written off AMI insurance rang down south to get a value. Of course auckland has a higher price level for bikes and thus I got a lower payout. Get agreed value!

AllanB

8th October 2009, 12:25

Have not checked the bike one but my 'agreed value' policies on the cars also get devalued by the insurance company despite me not agreeing!
Basically they make a annual 'adjustment' devaluing the amount a small percentage.
If by chance you have a vehicle that is actually increasing in value you can get a valuation done for the insurance company. I had that done with a older bike a few years back as I'd had it long enough to start rising in value again.

As a wee side note I see a few dealers selling pre-owned Hornet 900's (obviously trade-ins) at a price that equals what I paid for min NEW two years ago. A sign of the price increases and the big gap in the market for $10-12k bikes.

madmal64

8th October 2009, 12:34

Having just gone through this process today, with my wife car I would suggest if you can go for or get agreed value it would save a heap of aggravation.
My wife's car ends up being written off and they claim the car was worth $5k. I responded that if that's the case then they better find the replacement vehicle, same year condition & similar mileage and put it on my driveway. Ended up with 2 independent valuations and got a fair market price & settlement.
BUT... its been the 2 weeks of farting around arguing the point that has been a real hassle. If it was an agreed value I would have had the whole deal done by now and the vehicle replaced.

jetboy

8th October 2009, 12:42

Just a heads up with agreed value policies - read the policy wording carefully!

All agreed value policies I have read through with a fine tooth comb have an escape clause where, one way or another, they don't have to pay an agreed value.

Example 1) One insurer states that the vehicle must be in excellent condition before the loss in their opinion (not yours) before paying agreed value.

Example 2) If the market value is a set percentage less than the agreed value, they will pay the market value.

A market value policy is not as bad as people make it out to be. The purpose of an insurance policy is to put you back in the same financial position you were in before the loss. So, if your vehicle is worth $15,000 then expect your claim to be settled on $15,000. On the flipside, if you think your bike is worth $25,000 but it's actually only worth $15,000 - expect to be paid $15,000.

Many people make the mistake of under/over insuring property for whatever reason. The best thing to do is find out what your bike is worth (your local dealer should have a good idea) and then insure it based on that. Or alternatively pay for a valuation from a registered motor vehicle valuer - this carries more clout in the event of a claim.

Better still - insure with a broker like me so I can save you all the hassle and get you set up correctly from the start!

/sales pitch

Mully

8th October 2009, 13:21

A market value policy is not as bad as people make it out to be. The purpose of an insurance policy is to put you back in the same financial position you were in before the loss. So, if your vehicle is worth $15,000 then expect your claim to be settled on $15,000. On the flipside, if you think your bike is worth $25,000 but it's actually only worth $15,000 - expect to be paid $15,000.

The problem with that is that the insurance company decide what the market value is. We used to use a company that was adamant about the insured value to which I, as madmal said, "find me one, the same condition, mileage and spec level, for that money". The short answer from them was "fuck off".

To my mind, if you can't replace the vehicle with one the same for the payout, then the insurance company is ripping you off. Surely the "Market Value" is the value of replacing it with one the same.

There's also the issue that your car/bike might only be worth $X on paper, but in reality you haven't realised that "loss" yet. You are technically no worse off, but in reality you have crystalised that loss because of the insurance payout of less than you thought (plus the excess, plus the possible no claims bonus loss). Made worse, of course, when the bike is financed.

Add in the fact that if I say "Mr Insurance, my bike is worth $15K. What is the premuim on that?" the insurance company don't turn round and say "Nah, it's only worth $12K idiot, this will be your premium". They happily take your premiums until you make a claim (for $15K), at which point they go "Well, here's the thing....." That's the bit that grates me.

Gremlin

8th October 2009, 13:31

Good luck getting an agreed value policy... Dave from Kiwibike said there weren't any for regular bikes in NZ.

I have a shitload of extras on bike, that do indeed raise the value (baehr comms, etc), try convincing insurance of that. If something happened, apparently insurance would say, right, insured for 28k, we can get that model, that km, for 22k. Here's 22k :buggerd:

Well fuck that as none of the extras have been factored in :mad:

In the end, the shop gave a valuation of the bike, even that was argued with a bit, until shop said, yes, I would sell it for that, on the floor.

The best part is, I get to go through all this in a years time. What happened to insurers WANTING your business? Where's the competition?

jetboy

8th October 2009, 13:38

The problem with that is that the insurance company decide what the market value is. We used to use a company that was adamant about the insured value to which I, as madmal said, "find me one, the same condition, mileage and spec level, for that money". The short answer from them was "fuck off".

The insurer shouldn't decide what the value is. I know that in the event of a claim my claims department appoints an assessor who goes and gets independant valuations from registered motor vehicle valuers, in addition to looking at current "for sale" listings etc.

To my mind, if you can't replace the vehicle with one the same for the payout, then the insurance company is ripping you off. Surely the "Market Value" is the value of replacing it with one the same.

I see your point, however the market value is not replacement value. If you have a $10,000 bike and add $10,000 of extras, your bike's value does not suddenly become $20,000. Look at boy-racer cars, most have a $2,000 car and add mags, stereo, and all sorts of other crap worth say $5,000. The new market value of their car is not $7,000.

Add in the fact that if I say "Mr Insurance, my bike is worth $15K. What is the premuim on that?" the insurance company don't turn round and say "Nah, it's only worth $12K idiot, this will be your premium". They happily take your premiums until you make a claim (for $15K), at which point they go "Well, here's the thing....." That's the bit that grates me.

Again, I see your point, however insurance companies do what they do best - insure. Motor vehicle valuers do what they do best - value vehicles. The onus is on you, the client, to advise what you want to insure and for how much bearing in mind the fine print in the policy wording. In the event of a claim the insurers, at their cost, will find out the market value and go from there.

I often get asked why I don't tell the client what to insure their bike for, and I tell them that I have never seen the bike so who am I to tell you what to insure the bike for? Yes, in the event of a claim we will pay the market value but we employ the right people to tell us what that is - at the insurer's cost.

The long story short is that if your policy is "Market Value" then do your homework and find out what your bike is worth. Ring around - ask people who know if you are unsure. Remember to be realistic and exclude your "sentimental value" - your own bike will always be worth more to you than someone else.

jetboy

8th October 2009, 13:42

I have a shitload of extras on bike, that do indeed raise the value (baehr comms, etc), try convincing insurance of that. If something happened, apparently insurance would say, right, insured for 28k, we can get that model, that km, for 22k. Here's 22k :buggerd:

Insurers I deal will do factor in extras - your claim won't be settled based on brand new prices of those extras, but they do count.

Icemaestro

8th October 2009, 13:42

jetboy

8th October 2009, 13:51

Yeah, so anyone got a decent idea of what I should insure it for?

cbr250rr 1992, 97k on the clock though it had another engine of unknown km's put it in it by the owner before the one i brought it off (around 90000km), has had full services and carbs cleaned and bits replaced etc just recently by the motorcycle doctor, black paint job with the normal cbr logos on it, micron exhaust (but have the stock one still too)...
Is it build year 1992 or Rego year 1992?

I have a '90 250RR and I reckon mine's at least $4,500. But I've played with mine heaps - engine swap + cleaned internals, full aftermarket exhaust, new fairings + tinted screen, shift lights, modified airbox bla bla bla list goes on.

PM me with a pic and I should be able to help you out. Also check out cbr250.com there's a wealth of info on there.

p.s. considering the nature of the thread and my previous posts I should add that this post is made in a personal capacity.

Mully

8th October 2009, 14:05

Thanks for the info, Jetboy.

In the event of a claim the insurers, at their cost, will find out the market value and go from there.

What do they do if the value comes in higher than they expect? i.e. I insure a bike for $4K, the fact that I've owned it means the market value is now $6K and it gets pinched and I put a claim in?

Do they pay me the assessed value ($6K) or the value I insured it for ($4k).

I'm not having a go, I'm actually curious about this. I paid less for my bike than any other one I've seen, private or dealer. To my twisted little mind, I've paid less than the market value, but I should get market value.

jetboy

8th October 2009, 14:21

Thanks for the info, Jetboy.

What do they do if the value comes in higher than they expect? i.e. I insure a bike for $4K, the fact that I've owned it means the market value is now $6K and it gets pinched and I put a claim in?

Do they pay me the assessed value ($6K) or the value I insured it for ($4k).

I'm not having a go, I'm actually curious about this. I paid less for my bike than any other one I've seen, private or dealer. To my twisted little mind, I've paid less than the market value, but I should get market value.

All gravy baby :2thumbsup

Ok this is where it gets a bit tricky. Policies will pay out the market value or the sum insured (the value listed in your insurance schedule/certificate), whichever is the lesser amount.

If you insure the bike for $4k but it's actual market value is worth $6k, then your initial claims settlement will be based on the $4k - however the remaining $2k is what's called an 'uninsured loss' and may be recoverable. The important thing to remember with market value policies is that your claim will be based on the sum insured or the market value, whichever is the lesser amount.

With regards to the scenario where you paid less for the bike, the purchase price doesn't necessarily dictate market value. You could pay $1,000 for a bike worth $5,000 and insure it for $5,000. You could also pay $10,000 for the same bike and insure it for $10,000 - however as the policy is based on market value (assuming this is the basis of the policy) you'll only get the $5,000.

Make more sense?

Icemaestro

8th October 2009, 14:37

I'm pretty sure it's build year 1992 (though I have to go by rego) as the rims match those from 1992 (1990 and 1991 ones are different) - is there any way to know for sure? I can't put pics in a PM for some reason, here it is here: http://www.kiwibiker.co.nz/forums/showthread.php?t=106201

(note: these pics are from a couple weeks ago as I'm still re-doing the paint job to what I described before - is only looking better now though.

Is it build year 1992 or Rego year 1992?

I have a '90 250RR and I reckon mine's at least $4,500. But I've played with mine heaps - engine swap + cleaned internals, full aftermarket exhaust, new fairings + tinted screen, shift lights, modified airbox bla bla bla list goes on.

PM me with a pic and I should be able to help you out. Also check out cbr250.com there's a wealth of info on there.

p.s. considering the nature of the thread and my previous posts I should add that this post is made in a personal capacity.

jetboy

8th October 2009, 14:48

p.dath

8th October 2009, 14:55

Not that many insurance companies offer "agreed value" policies on motorcycles. Even when you have an agreed value policy the agreement usually lapses after 12 months and becomes market value, unless you ring them up and make another agreement.

Also agreed value policies usually have a tolerance. They can only be a certain % above or below market value.

When an insurance company does a market value appraisal it is often done from recent sales. For instance, you can buy purchase data from people like Turner's Auctions (for cars ...). The insurance companies effectively have a book of what every make, model and year of car is worth, retail and wholesale, for any one point in time.

If you go to a site like www.carjam.co.nz, and enter your car number plate, you'll see what I mean.

Icemaestro

8th October 2009, 15:02

For instance, you can buy purchase data from people like Turner's Auctions (for cars ...). The insurance companies effectively have a book of what every make, model and year of car is worth, retail and wholesale, for any one point in time.

If you go to a site like www.carjam.co.nz, and enter your car number plate, you'll see what I mean.

Key word there being cars..both that and the valuation thing doesn't seem to work with bikes, even 2008/9 ones... (of the 2 I've tried :-P)

jetboy

8th October 2009, 15:04

Not that many insurance companies offer "agreed value" policies on motorcycles. Even when you have an agreed value policy the agreement usually lapses after 12 months and becomes market value, unless you ring them up and make another agreement.

All agreed value policies I deal with are 12 month policies (i.e. you buy for a year) and after that you need to renew - this is completely normal and market value policies are the same. The same policies do not drop to market value after a year. You might be confused with cover extensions some policies offer.

The insurance companies effectively have a book of what every make, model and year of car is worth, retail and wholesale, for any one point in time.

Really? :blank:

Mully

8th October 2009, 15:12

If you insure the bike for $4k but it's actual market value is worth $6k, then your initial claims settlement will be based on the $4k - however the remaining $2k is what's called an 'uninsured loss' and may be recoverable. The important thing to remember with market value policies is that your claim will be based on the sum insured or the market value, whichever is the lesser amount.

Right. So I should get the bike valued and ring the insurance company then?

jetboy

8th October 2009, 15:25

Right. So I should get the bike valued and ring the insurance company then?
Valuations from registered valuers cost money...so be aware if you decide to go down this route.

Another (free) option is to pop into your local dealership/service mechanic and ask them what you should expect to insure it for...in it's present condition and including any extras. Although not 100% accurate or reliable, it gives you a fair idea of what to expect.

Then call your insurer, tell them how much you want to insure it for and they will set up the policy based on that figure. I'd suggest keeping up to date with the value of your bike and advising your insurer (once a year) to avoid disapointment in the event of a claim.

swbarnett

9th October 2009, 10:53

Insurance premiums are based on the sum insured. If the payout is lower than this then should I not be entitled to a partial refund on premiums? Clearly I've been overcharged.

FROSTY

9th October 2009, 11:11

Folks I have a customer dealing with this EXACT issue. The good news is she listened to me and took Gap insurance on the car.
The way Gap works is that it pays the difference between what the normal insurance covred her for and what she owed on the car.ie the setlement figure.
I'm personally of the opinion that AS A MINIMUM any vehicle on finance should be covered for enough to settle out the finance.

325rocket

9th October 2009, 11:35

Insurance premiums are based on the sum insured. If the payout is lower than this then should I not be entitled to a partial refund on premiums? Clearly I've been overcharged.

This is the kicker for me. Surely it is illegal to charge premiums based on an insured value and then when the time comes pay a lower amount that was not mentioned in the contract? I signed an agreement that I would be paid out replacement value of $17000 for my bike. The insurance company had no problem working premiums around this figure so a contract was drawn up and agreed to by both parties. From what I have read on here it im guessing I would probably be paid out around $14500 - $15000. Well that’s not what im paying for! If that was the deal my premiums would have been $40 odd less a month. This really pisses me off and I think the insurance world needs a bit more transparency and possibly more regulation.

Is YOUR bike condition taken into account upon settlement?

p.dath

9th October 2009, 11:41

This is the kicker for me. Surely it is illegal to charge premiums based on an insured value and then when the time comes pay a lower amount that was not mentioned in the contract? I signed an agreement that I would be paid out replacement value of $17000 for my bike. The insurance company had no problem working premiums around this figure so a contract was drawn up and agreed to by both parties. From what I have read on here it im guessing I would probably be paid out around $14500 - $15000. Well that’s not what im paying for! If that was the deal my premiums would have been $40 odd less a month.

If it is a market value policy, then yes, you are quite likely to be paid out less than you have it insured for. And no, its not illegal for you to insure the bike for more than its market value (unless you insure it for a grossly higher amount, but that is a different story).
Basically it is your responsibility to insure you bike for its market value - which is what you stand to loose. Not for what it will cost when you bought it (or what it will cost to replace it).

Is YOUR bike condition taken into account upon settlement?

Not usually.

Insurance is one of those bastard things, it reminds me of a lottery ticket. You can never be completely sure of the outcome until it is all over.

325rocket

9th October 2009, 11:58

Basically it is your responsibility to insure you bike for its market value - which is what you stand to loose. Not for what it will cost when you bought it (or what it will cost to replace it).

it just seems strange to me. ‘We’ agreed on the value not just me.
Also why does it matter what the market value is? I don’t see why I cant insure my bike for full replacement value and get that paid out. As far as the insurance company is concerned isn’t it just $17000 worth of ‘product’. The ‘product’ shouldn’t matter. If I crash or my bike is stolen and there is no question of insurance fraud on my part surely I should get what I have been paying for!
I know it doesn’t work that way but it should. When the policy was drawn up all premiums were based on their risk of $17000. I seriously think there is a gap here for the likes of Erin Brockovich to step in and get us all a refund for historic over paid premiums.

NSR-Dan

9th October 2009, 12:08

nothing wrong with a market value policy, but you should get your own valuations on an annual basis and inform the insurance company every time you renew your policy.

Also when you make a claim that ends up being total loss, you allways have the option to get written valuation from a dealer of your choice, which the insurance company has to go by. I think this has to do with nz laws and your rights as a consumer. If not i think you can make a complaint the the insurance ombudsman.

NSR-Dan

9th October 2009, 12:14

it just seems strange to me. ‘We’ agreed on the value not just me.
Also why does it matter what the market value is? I don’t see why I cant insure my bike for full replacement value and get that paid out. As far as the insurance company is concerned isn’t it just $17000 worth of ‘product’. The ‘product’ shouldn’t matter. If I crash or my bike is stolen and there is no question of insurance fraud on my part surely I should get what I have been paying for!
I know it doesn’t work that way but it should. When the policy was drawn up all premiums were based on their risk of $17000. I seriously think there is a gap here for the likes of Erin Brockovich to step in and get us all a refund for historic over paid premiums.

An Agreed policy is when "we" agree on a value
a Market policy, "you" Agree on the value and its your responsibility to adjust this value as your vehicle depreciates

jetboy

9th October 2009, 12:19

Is YOUR bike condition taken into account upon settlement?

Not usually.

I don't know which insurer you use p.dath but the ones I use sure will. It's unfair to settle a rusty POS in the same fashion you would settle an immaculate example of the vehicle.

325rocket

9th October 2009, 12:22

I don't know which insurer you use p.dath but the ones I use sure will. It's unfair to settle a rusty POS in the same fashion you would settle an immaculate example of the vehicle.

well it just happens im getting quotes now for my bike insurance. ill send you a message

p.dath

9th October 2009, 12:33

I don't know which insurer you use p.dath but the ones I use sure will. It's unfair to settle a rusty POS in the same fashion you would settle an immaculate example of the vehicle.

Most of my experience with insurance companies has been on a commercial basis (not personal).
In the claims I have done, I have never seen an adjustment made for the condition of the "car" that was damaged or written off.

I get the impression from your posts that you work in or are related to the insurance industry, so I bow to your greater knowledge.

dogsnbikes

9th October 2009, 12:46

I have both agreed and market value policies on my bikes....

Now from what my insurance company tells me with the market value it works on the basis that your bike is stock standard unless you have it noted in your policy that you have aftermarket parts on your bike that even includes something as minor as the airfilter,if aftermarket parts have been noted in the policy then that is taken into consideration if its a write-off claim

with my bike that has agreed value I would be foolish not too,as I know that I would not get another bike for its age with such a low milage and showroom condition for a market value payout,they automatically roll over the value each year....and have photo documentation of the bike and although I am limited to 5000k/year that doesn't bother me at all I still have other bikes too ride anyway

my advise is always communicate with your insurance company and ask then in plan english how you are covered,photograph everything and have your blings noted in your policies cover your arse's,so they know everything that is on your bike

rosie631

9th October 2009, 12:50

dogsnbikes

9th October 2009, 12:59

There was some one on here who had their claim turned down because their bike wasn't stock standard. The insurance company used the fact that they had after market pipes on their bike to weasel out of the claim

Thats why it pays to document everything and have it included in policies,Im about to install a whole new exhaust system on the trumpy part of which is a TBR carbon muffler and my insurance company are more than happy to cover it and any other bling etc as long as they know about it

325rocket

9th October 2009, 13:05

Thats why it pays to document everything and have it included in policies,Im about to install a whole new exhaust system on the trumpy part of which is a TBR carbon muffler and my insurance company are more than happy to cover it and any other bling etc as long as they know about it

sounds like a good company. who are you insured with?

dogsnbikes

9th October 2009, 13:11

sounds like a good company. who are you insured with?

Classic Cover you have too be over 30 and have had a full licence for more than 2 years,this I know beacuse I am lending one of the bikes to a mate for the summer and he will be covered by them....

Gremlin

9th October 2009, 17:00

Icemaestro

9th October 2009, 21:05

With any insurance, you really do need to keep them up to date and let them know everything...

My broker knows about all tickets and I emailed a list of mods to the bike, to them, so everything was crystal clear. That way, there are no surprises.

I believe the OP isn't telling the whole story... and missed some items that were favourable to the other side in this one... :rolleyes:

What items did I miss? I was just using my girlfriends scooter as an example - I never knew that they could re-value what they had agreed apon - and was asking about my bike - for which I simply insured for around about how much I thought it would be worth compared with the ones on trademe at the moment.