All too often one hears the common complaint that Insurers did not pay you out what your vehicle is worth after it has been written off. It must be remembered that your policy of insurance is a legal contract between you and your insurer and taking the huge amount of legislation that governs and regulates our industry, together with the consumer protection act, insurers cannot be in a position to not honour the pay-out in strict accordance with the policy provisions, and this is where you must make your choices and take responsibility as to how you want to insure your vehicle and you have various options available to you. It is then on this value that insurers will charge their premium to you and settle any write-off claim.
1. Market value – here, the trade-in value and the retail value of the vehicle are added and averaged out to determine the Market Value of the vehicle.
2. Retail value – this is self-explanatory and the vehicle is insured at the determined retail value at the time of incepting the policy.
3. Agreed value – this is where a value of the vehicle is arrived at and agreed on between yourself and your insurer and the vehicle is then insured at this agreed value. This method is normally only used where specialised insurance is required such as for vehicles with low kilometres or where considerable investment has been made into the vehicle in rebuilding/refurbishing it to a mechanical and cosmetic standard that is higher than that of a standard vehicle of the same age.
It must always be remembered that despite the determination of the insured value of the vehicle, the policy conditions and exceptions will always apply when settling any claim. To this end, it is imperative that you clearly and comprehensively understand such policy conditions and exceptions. We are not all Brain Surgeons, Pilots or Engineers. Nor are we all insurance specialists. Our advice to you here is that you get an independent, qualified and FAIS accredited Insurance Broker to assist and advise you in determining the extent of insurance cover you need and to make sure that the policy wording is designed to match your needs.