Insurance valuation of bikes

[Icemaestro]

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]

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]

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]

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]

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]

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]

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]

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]

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

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

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]

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]

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

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]

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)...

[jetboy]

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]

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]

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

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?