The insurance value of cars. Are they correct in the current climate?

[Cowley]

I was looking at the insurance value of our vehicles if any of them were written off and needed replacing and looking at the price of equivalent cars on the market at the moment you’d really struggle to buy a similar vehicle for the price listed on the insurance documents.

Do insurance companies take the current market into account or do they have a different way of doing things do any of you know? The price of used cars is really high at the moment and even really high mileage stuff is going for silly money.

 

[david1212]

I was looking at the insurance value of our vehicles if any of them were written off and needed replacing and looking at the price of equivalent cars on the market at the moment you’d really struggle to buy a similar vehicle for the price listed on the insurance documents.

Do insurance companies take the current market into account or do they have a different way of doing things do any of you know?

I can not recall a policy with an actual value but just the words 'market value'. In theory the payout should buy the same model / specification / age / mileage. In reality unlikely certainly from a trader never mind dealer even if only very limited 1 month warranty. Having a decent 6 month warranty and breakdown cover is considered a gain regardless of the risk, as you found out. The 'new-to-you' buy needing a battery and 4 main brand rather than ditchfinder tyres can easily be £500, just as did the write-off 12 months ago but no or at best minimal allowance for this.

The price of used cars is really high at the moment and even really high mileage stuff is going for silly money.

Indeed and related to this cars that pre-March 2020 would be written off are now getting repaired.

 

[Cowley]

Yes definitely. The market is full of Category S (structural damage) write offs as well as Category N (non structural) and who knows how good those repairs have been done? I wouldn’t touch any ex write-off personally but each to their own I guess?

Just did a basic value check on my Audi A6 and it’s come up as £1500 if selling privately and I think that’s roughly what it says it’s worth on my insurance documents (it’s on pretty high mileage - 164000 ish). I think I’d struggle to get the equivalent model for that money bearing in mind that this is pretty much the same car (albeit on 18000 miles less) in the same colour, the same age and spec, and even for sale in Peterborough where I bought mine from strangely enough (they must grow them there):



£4295! Yes it’s from a dealer but so was mine just over two years ago and it was only on 141000 when I got it. The price I paid then?
£2200…

What on earth is going on with the price of used cars at the moment?

 

[Richard Scott]

Yes definitely. The market is full of Category S (structural damage) write offs as well as Category N (non structural) and who knows how good those repairs have been done? I wouldn’t touch any ex write-off personally but each to their own I guess?

Just did a basic value check on my Audi A6 and it’s come up as £1500 if selling privately and I think that’s roughly what it says it’s worth on my insurance documents (it’s on pretty high mileage - 164000 ish). I think I’d struggle to get the equivalent model for that money bearing in mind that this is pretty much the same car (albeit on 18000 miles less) in the same colour, the same age and spec, and even for sale in Peterborough where I bought mine from strangely enough (they must grow them there):

View attachment 126953

£4295! Yes it’s from a dealer but so was mine just over two years ago and it was only on 141000 when I got it. The price I paid then?
£2200…

What on earth is going on with the price of used cars at the moment?

They are ridiculous, my mother's 2015 VW Up! got written off in October and it cost her over £12k for a 5 year old replacement, admittedly with only 6600 miles on it but still a 5 year old car!
Was wondering if the write off got sold as salvage and repaired!

 

[Cowley]

They are ridiculous, my mother's 2015 VW Up! got written off in October and it cost her over £12k for a 5 year old replacement, admittedly with only 6600 miles on it but still a 5 year old car!
Was wondering if the write off got sold as salvage and repaired!

It’s absolute madness Richard, I think there was a point probably about three or four years ago where used cars were decent value but honestly I’m not sure that the insurance payout values are worth the paper they’re written on now, and even we’re getting even less value for money when you consider how much insurance premiums have gone up over the last couple of years.

 

[D365]

I fear used prices are still over-inflated from the pandemic chaos.

 

[Welly]

New cars are taking ages to be delivered due to global supply chain disruption caused by the pandemic and the Ruzzian invasion of Ukraine - you will be waiting up to a year before your new car is delivered which is why second hand cars are expensive at the moment.

 

[plugwash]

What on earth is going on with the price of used cars at the moment?

New car sales have been low in recent years, first because of a collapse in demand at the start of the pandemic, then when demand started to recover the car makers faced supply shortages as they tried to scale production back up.

While clearly some used cars come onto the market because their owner dies, stops driving or has multiple cars and decides to reduce the number, most used cars come onto the market because their owner has bought a newer car.

 

[jon0844]

There are signs that prices are starting to normalise again, slowly, as car makers are overcoming some of their issues, so anyone wanting to make a packet on their current car might want to sell soon before it's too late!

 

[Cowley]

There are signs that prices are starting to normalise again, slowly, as car makers are overcoming some of their issues, so anyone wanting to make a packet on their current car might want to sell soon before it's too late!

Yes it’s a good time to sell and a bad time to buy!

 

[RailWonderer]

While clearly some used cars come onto the market because their owner dies, stops driving or has multiple cars and decides to reduce the number, most used cars come onto the market because their owner has bought a newer car.

Or the owner moves country. Those moving country discounts are normally the best ones.

 

[david1212]

They are ridiculous, my mother's 2015 VW Up! got written off in October and it cost her over £12k for a 5 year old replacement, admittedly with only 6600 miles on it but still a 5 year old car!
Was wondering if the write off got sold as salvage and repaired!

Yes definitely. The market is full of Category S (structural damage) write offs as well as Category N (non structural) and who knows how good those repairs have been done? I wouldn’t touch any ex write-off personally but each to their own I guess?
....

I was thinking of insurance companies giving their approved repairers autorisation to repair rather than writing off so supposedly repairs return the car to as it was before the damage then long term no effect on value.
Back street outfits buying what is still written off and repairing with recovered parts as now worthwhile even lucrative is another issue.

They are ridiculous, my mother's 2015 VW Up! got written off in October and it cost her over £12k for a 5 year old replacement, admittedly with only 6600 miles on it but still a 5 year old car! ...

New car sales have been low in recent years, first because of a collapse in demand at the start of the pandemic, then when demand started to recover the car makers faced supply shortages as they tried to scale production back up.

While clearly some used cars come onto the market because their owner dies, stops driving or has multiple cars and decides to reduce the number, most used cars come onto the market because their owner has bought a newer car.

Once a significant proportion of used cars came from hire company fleet renewal, company car routine renewal and car business employee discount schemes - Ford, Austin-Rover,Vauxhall, Peugeot etc when they had UK plants. I guess the former still happens even if cars are kept longer but now fewer company cars plus retained for longer particularly if not high mileage while many plants have closed.

With prices up and availability down together with fewer miles travelled potentially private owners are more likely not to change until major work / expense arises - cambelt, full set of tyres, brake discs and pads etc. Being realistic a trader buying from auction is going to do the minimum required to resell.
Maybe now beyond 3 years old the best buys are private sales where the driver has stopped driving ?

£4295 for a 2007 almost 150k mile Audi A6 makes ~£7000 for a 2012 60k miles BMW 1 series coupe look cheap.

Back pre March 2020 £12k would probably have bought if not a year old a two year old VW Up! with 6600 miles on the clock.

 

[Bletchleyite]

With prices up and availability down together with fewer miles travelled potentially private owners are more likely not to change until major work / expense arises - cambelt, full set of tyres, brake discs and pads etc.

That would be true, but for one thing - almost all new cars are now sold on PCPs, and a PCP has an end date. Thus most people who buy new change every 3, 4 or 5 years - few pay the "balloon payment" to keep the car - and that provides a ready flow of decent used cars.

My Dad, who does do this, has been approached with decent offers before from the dealer to buy back the car used because they have a market for that and so can offer him a good PCP deal to go new again sooner.

 

[JohnMcL7]

I've been keeping a close eye on second hand car prices and they still seem quite high to me, at least on the cars I've been looking at. In February 2020 I was looking at an 18 month old car with 10,000 miles on the clock for £17,500 which was the cheapest one for sale but there were others fairly close in price. I decided against it because I thought I'll wait until these cars hit three years old and much cheaper however they shot up in price and looking at the current market, £18,000 to £20,000 will get you a four year old car with 30,000-40,000 miles on the clock and to get one the age and mileage I was looking at, that would be over £25,000. So far, they don't really seem to be coming down much and I'm noticing there's not many cars for sale from 2020 to 2021 which may be due to reduced manufacturing at the time.

I bought my current car for £10,000 back in 2014 I think it was, it's an early 2011 car and I've seen identical models for sale a year or two older and with over 100,000 miles on the clock (mine is around 65K) for £7500 which seems crazy. What concerns me is if companies can see they can get away with inflated second hand car prices they'll keep them but I'm still hoping when new car deliveries get more back to normal the second hand market will return to where it was.

 

[Bletchleyite]

Prices of nearly-new used are silly-high at the moment because most new cars are taking months to delivery, and that's filtering down.

I have thought about selling mine now but not buying another, and buying one in maybe 6 months to a year when prices come back down, it's a shame the railway is being so rubbish and may not be an adequate substitute at present.

 

[Speed43125]

My car is insured for a value of £700 which seemed not so unreasonable given I bought it with 9 months MOT for £475. I was looking today and saw a same shape, lower trim car, needing a set of rear callipers, and 2 years older for £850. I know high scrap metal prices have done away with the real bangers for a couple hundred quid (as evidenced by the A6 listing above for one), that coupled with the new car market being relatively slow to filter all the way down means there really are no bangers to be easily had.

Suppose it increases the likelihood you'll keep an old car on the road though when your 15 year old car might be worth £1400 instead of £700, and that's presumably better for the environment.

 

[Zamracene749]

Insurance paid me 2250 for my 2009 top of the range Mondeo Titanium X sport 2.2TDCi 6 months ago (written off due to flood damage). I'd have been happy to replace it like for like, but that would have involved me finding another 3 or 4 thousand. They pay minimum trade/auction value, utter rip off. Recent cambelt at 500 quid, 10 months test, all new discs and pads, 600 quids worth of michelin Pilot sport 4 with less than 2000 miles on them all round. I couldn't find scrappers for the same value as they paid, but because it was a rarer model and higher miles, there wasn't anything comparable for sale so I had to take their offer.
It would be nice if they had to just provide a similar or same car, same condition and age etc. That's all I wanted,now I'm paying off a loan and of course had to waste fuel and time searching for a replacement. Heads they win, tails you lose.

 

[Bletchleyite]

Insurance paid me 2250 for my 2009 top of the range Mondeo Titanium X sport 2.2TDCi 6 months ago (written off due to flood damage). I'd have been happy to replace it like for like, but that would have involved me finding another 3 or 4 thousand. They pay minimum trade/auction value, utter rip off. Recent cambelt at 500 quid, 10 months test, all new discs and pads, 600 quids worth of michelin Pilot sport 4 with less than 2000 miles on them all round. I couldn't find scrappers for the same value as they paid, but because it was a rarer model and higher miles, there wasn't anything comparable for sale so I had to take their offer.
It would be nice if they had to just provide a similar or same car, same condition and age etc. That's all I wanted,now I'm paying off a loan and of course had to waste fuel and time searching for a replacement. Heads they win, tails you lose.

Did you accept their first offer? Usual wisdom is never to do this but to negotiate.

 

[Zamracene749]

Did you accept their first offer? Usual wisdom is never to do this but to negotiate.

I battled for a short while, but I needed the cash to buy a replacement to get to work. They were having none of it sadly.

 

[Cowley]

I battled for a short while, but I needed the cash to buy a replacement to get to work. They were having none of it sadly.

I mean you’ve described exactly what I was getting at Dave. Not a good experience.

 

[JamesT]

I wrote off my previous car in 2019. My recollection is that Admiral asked me what I thought the car was worth at the time. I think I looked up the model on Parker's or something like that and gave the best price I saw. I don't think they quibbled over it and I got that less my excess. At 14 years old and with a load of rust underneath I don't think I would have done much better.

 

[david1212]

... Recent cambelt at 500 quid, 10 months test, all new discs and pads, 600 quids worth of michelin Pilot sport 4 with less than 2000 miles on them all round ....... Heads they win, tails you lose.

This is a typical example of what will never be considered. Even if you had found another around the same age and mileage for the amount of the payout all this is likely to need doing as the reason the car being sold.

I have had two write-offs.

I battled for a short while, but I needed the cash to buy a replacement to get to work. They were having none of it sadly.

Nearly 30 years ago this was my experience. The car was 4-5 years old but lower than average mileage. I guess they expected the first offer to be refused so had a second slightly higher one ready. They would not budge after the third offer based on 4 almost new tyres but as I recall they only added around the cost of just one tyre.

I wrote off my previous car in 2019. My recollection is that Admiral asked me what I thought the car was worth at the time. I think I looked up the model on Parker's or something like that and gave the best price I saw. I don't think they quibbled over it and I got that less my excess. At 14 years old and with a load of rust underneath I don't think I would have done much better.

My second experience was around 18 years ago so internet to help research. They found a car similar age and mileage for sale and offered the window price. I was already looking to change hence I knew I would not get this as p/ex ( unless the price of the 'new' car was inflated to cover the high p/ex ) or private sale so I accepted immediately. The car was not worth a lot. P/ex perhaps £5-600 and sale at best under £800 while payout was I recall £1100.

 

[DelW]

There was a recent discussion on this forum of "gap" insurance, which wasn't highly thought of by most contributors:

Gap insurance on a used car, worth it?

Bought a car recently and the car came with 'free' 30 day gap insurance cover. The insurance company phoned and asked if I'm interested in further cover for two years. Is there any point in this on top of my fully comp car insurance?

www.railforums.co.uk

Presumably though, that would have dealt with the issue highlighted here:

Insurance paid me 2250 for my 2009 top of the range Mondeo Titanium X sport 2.2TDCi 6 months ago (written off due to flood damage). I'd have been happy to replace it like for like, but that would have involved me finding another 3 or 4 thousand. They pay minimum trade/auction value, utter rip off. Recent cambelt at 500 quid, 10 months test, all new discs and pads, 600 quids worth of michelin Pilot sport 4 with less than 2000 miles on them all round. I couldn't find scrappers for the same value as they paid, but because it was a rarer model and higher miles, there wasn't anything comparable for sale so I had to take their offer.
It would be nice if they had to just provide a similar or same car, same condition and age etc. That's all I wanted,now I'm paying off a loan and of course had to waste fuel and time searching for a replacement. Heads they win, tails you lose.

as it ought to have topped up the payout to the price of a replacement.

Of course, whether or not that's worthwhile depends on the cost of the cover and the size of the supplementary payout.

 

[JamesT]

There was a recent discussion on this forum of "gap" insurance, which wasn't highly thought of by most contributors:

Gap insurance on a used car, worth it?

Bought a car recently and the car came with 'free' 30 day gap insurance cover. The insurance company phoned and asked if I'm interested in further cover for two years. Is there any point in this on top of my fully comp car insurance?

www.railforums.co.uk

Presumably though, that would have dealt with the issue highlighted here:

as it ought to have topped up the payout to the price of a replacement.

Of course, whether or not that's worthwhile depends on the cost of the cover and the size of the supplementary payout.

I'm not sure that gap insurance would be relevant on a 2009 car. Gap insurance is for people still paying for a car on monthly payments. The Gap is between the value of the car as deemed by the insurers and what you are still owing on the loan.

 

[DelW]

I'm not sure that gap insurance would be relevant on a 2009 car. Gap insurance is for people still paying for a car on monthly payments. The Gap is between the value of the car as deemed by the insurers and what you are still owing on the loan.

That was the issue described in the penultimate sentence of the post I quoted:

"It would be nice if they had to just provide a similar or same car, same condition and age etc. That's all I wanted,now I'm paying off a loan and of course had to waste fuel and time searching for a replacement. Heads they win, tails you lose."

The original post in the "gap" thread was referring to buying a used car, with the offer of two years gap insurance. However, I don't know how long one could ultimately extend it.

 

[JohnMcL7]

The insurance company should have paid the current market price for the car, that's not what gap insurance is for and it wouldn't make any financial sense to keep gap insurance for a car as old as that even if it's possible. The primary use for gap insurance is to cover a potential shortfall on reasonably new cars bought on finance where the depreciation is faster than the payments being made which means the insurance pay out for the market value of the car is less than the settlement value of the car.