Insurance Traps For 4WD Owners?

Submitted: Thursday, Mar 13, 2014 at 17:46
ThreadID: 106687 Views:3912 Replies:12 FollowUps:27
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I’d like to highlight a situation that has arisen as the unfortunate result of my daughter and a friend both writing off their vehicles in accidents over the past 12 months. My colleagues vehicle was involved in a minor bingle (his car was actually parked) that broke the rear axle, and linkage of his vehicle. But the vehicle was about 15 years old.

This is my experience & opinion only.

When a vehicle is written off by an insurance company, a number of things happen:
1. Your insurance policy is cancelled, and the annual premium that you have paid is kept by the insurance company (i.e. if you paid your insurance for the year yesterday, write off the car tomorrow, they cancel the insurance, and keep the balance)
2. Your rego is cancelled, and any remaining refund that is realised is paid to the insurer
3. The insurance company will sell your vehicle “as is” and recover a certain amount from the sale of the damaged vehicle
4. Your excess is deducted from any payment made.

So it would appear from the outset, that insurance companies have an incentive to write off a vehicle that could otherwise be repairable in the customer’s eyes.

However, we customers need to take into account the sums above, and the insurance company’s assessment of the “repairability” of the vehicle. This "repairability" is calculated at their absolute discretion based on the above income streams.

One of the main issues here is what is a fair “market value”? Again, my experience would indicate that the “fair” market value as assessed by insurance companies is way below that of the owner.

There are several reasons for this:

1. As an owner, we would sell the vehicle at a “retail” price (i.e. a private sale) – not a “wholesale” price, and perhaps more importantly,
2. Most 4WD owners (I take it that most readers have 4WD’s) have invested additional money in modifications to their vehicles (bull-bar, winch, lights, suspension mods etc) which increases the investment in our vehicle.

Remember when the vehicle is written off – it becomes the property of the insurance company, and trying to remove things from the car after it’s been written off may in fact be illegal.

So what can be done to protect yourself in the event of a write off? Again, from my experience, the best thing to do is declare the additional modifications made to your vehicle to the insurance company. The insurance company should then ask for a cost of each modification, which can then be added to the resale value of the “standard” vehicle. Or if they replace the vehicle, it has to be replaced with the same modifications. Alternatively, a lot of insurance companies will offer “agreed value” in their policies, which means that they pay you an “agreed value” which can include modifications made to the vehicle.

Having been through the process now twice over the past 12 months, it’s better to think of these things before they happen, that way there are no nasty surprises should the worst happen.

Dunno if this helps anyone - but there you have it...

Cheers

Chris
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Reply By: Isuzumu - Thursday, Mar 13, 2014 at 18:37

Thursday, Mar 13, 2014 at 18:37
Good advise Chris, we have both of our vehicles insurance for agreed value, may not be what it cost us with all the mods, but probably double the amount we would get back if we were not insurance for agreed value. Does not seem to be as many companies that will do it now either.
Cheers Bruce
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Reply By: Honky - Thursday, Mar 13, 2014 at 18:39

Thursday, Mar 13, 2014 at 18:39
I do not see any problems with what you say as it states most of that in the PDF.
I personally prefer agreed value than market value as no issues if written off.
The value of the wreck "salvage Value" and repair cost is explained also in the PDF. Both combined cannot exceed the market or agreed value.
Some insurance companies will allow you first choice of buying your wreck back
Always declare additional accessories as the insurance company will not pay.
In relation to the value of the "market value} it is the cost to you to find a similar vehicle equal to the condition of the previous one not the wholesale or trade in value. I would get a second valuation from a professional and go back to your insurance company.

Honky
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Follow Up By: Member - Chris_K - Thursday, Mar 13, 2014 at 19:25

Thursday, Mar 13, 2014 at 19:25
Hi Honky

Yep agree with the "always read the fine print"...suppose my point was that the calculation is:

1. Add up the income from the rego, sale, insurance premium paid, excess etc
2. Deduct the "market value"
3. Insurance company decides which is higher.

Most customers don't get realise this, and therefore the insurance company always have a head start on the "value".

The other issue I have is that insurance premiums always seems to rise, while the value (and therefore the exposure of the insurance company) of the vehicle always declines.

Cheers

Chris
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Reply By: Member - Bruce C (NSW) - Thursday, Mar 13, 2014 at 18:45

Thursday, Mar 13, 2014 at 18:45
Hi Chris,

This has been my experience also back in 2009 or thereabouts.

I alerted people on this site to the facts exactly as you have found.

Not only did they write off the vehicle which was in my opinion quite repairable but unknown to me they had reduced the agreed value of the policy some months before and I paid it without making myself aware of it. Failed to read the 10 point font stuff on page 3.

So the upshot of all this is, Make sure you check every detail when the insurance comes in and ensure they have the correct agreed value for your replacement needs. Also, shop around.
I saved about $400 the last time I insured my cruiser by shopping around. I also saved around $600 on the house policy.

If I recall correctly the insurance company gave me a slip of paper to take to the motor registry to redeem the remainder of the rego.

Not a pleasant feeling though is it.

Cheers, Bruce.
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Follow Up By: Member - Chris_K - Thursday, Mar 13, 2014 at 19:27

Thursday, Mar 13, 2014 at 19:27
Hi Bruce

Nope not a pleasant feeling at all...at least no one was hurt! You can always replace a car.

Chris
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Follow Up By: Member - Bruce C (NSW) - Thursday, Mar 13, 2014 at 20:02

Thursday, Mar 13, 2014 at 20:02
Perzakly Chris, Perzakly.

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Reply By: Crusier 91 - Thursday, Mar 13, 2014 at 19:04

Thursday, Mar 13, 2014 at 19:04
My 1991 80 series is insured for $18K. I'd paid a very little extra ($45) to gain salvage rights to my truck if written.
So I am fully paid out and once recovered and delivered to my choice of destination I am free to salvage or sell.

People dont realize you can have the 100% rights in a insurance policy.

Having said that, ensure your vehicle is totally roadworthy.
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Follow Up By: Crusier 91 - Thursday, Mar 13, 2014 at 19:21

Thursday, Mar 13, 2014 at 19:21
When your insurance is due, make sure you have a agreed value and for a little extra get the "salvage rights".
Make sure it is in writing. It will save a lot of heart ache as many posters have already mentioned.
This means in the case of a write off, you will receive a pay out to the agreed value and the cost cover to retrieve your vehicle and 100% own the written off vehicle.
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Follow Up By: Michael ( Moss Vale NSW) - Thursday, Mar 13, 2014 at 22:06

Thursday, Mar 13, 2014 at 22:06
Do all insurance companies off that option? Michael
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Follow Up By: Michael ( Moss Vale NSW) - Thursday, Mar 13, 2014 at 22:09

Thursday, Mar 13, 2014 at 22:09
Oooppps! Do all insurance companies offer that option? Michael
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Follow Up By: Member - Chris_K - Thursday, Mar 13, 2014 at 22:30

Thursday, Mar 13, 2014 at 22:30
Hi Michael

I think "most" insurance companies offer agreed value...best to check with yours. Will cover the extra tyres you carry!

:)

Chris
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Follow Up By: Crusier 91 - Friday, Mar 14, 2014 at 08:11

Friday, Mar 14, 2014 at 08:11
Most everyday insurance companies wont insure a modified 4wd let alone cover you if have a accident other than on a bitumen road. It took me a while to find a insurer that would insure my 4wd and insure me for off road driving, for example if I get bogged on a remote beach and the tide takes my vehicle or if I'm on a private 4wd drive track in the Flinders Ranges and I roll the vehicle down a mountain. Modifications to the vehicle is another problem for the every day insurer, lift kits, diff air lockers, steel bull bars with winches, rear wheel carriers and so on.

I found 2 insurers only that will insure my truck with the modifications and for the places we go.
1.TCIS insurance brokers
2. Shannons.
Both these have insurance policies tailored for modified 4wd's and cover you for remote accidents as well as agreed values and salvage rights. They also insure for camping gear.
Any modifications on your vehicle must be within the law, for example a lift kit must be no more than 2" on any vehicle, you can have more than 2" but you must provide a engineering certificate.

The 2 insurance companies mentioned above have very good prices, I've been with TCIS for 3 years because they beat Shannons prices by $50 and have a higher agreed value.
Many off roaders use these two.
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Follow Up By: TTTSA - Friday, Mar 14, 2014 at 10:18

Friday, Mar 14, 2014 at 10:18
CGU cover my vehicle for "anywhere in Australia", as long as you are allowed to be there and/or have the required permits to be there.
They cover my accessories but only up to a % of the vehicle value, no idea about salvage rights or agreed value. I will do a bit of enquiring about those.

Cheers
Peter
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Follow Up By: get outmore - Friday, Mar 14, 2014 at 10:51

Friday, Mar 14, 2014 at 10:51
that was my findings with RAC insurance. and i believe most insurance companys are simular.
read the PDS to confirm but dont forget thats the legal document - they cant verbally change the conditions

unless it specifically says you are only covered on gazetted roads then you are covered anywhere

as above RAC covers you anywhere in australia (even tassie!!) you are legally allowed to be as long as your not racing or taking part in motorsports

alot of people just assume there not covered for offroad without reading the PDS
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Follow Up By: Charlie B2 - Friday, Mar 14, 2014 at 12:59

Friday, Mar 14, 2014 at 12:59
Hi all,

Just a point re Cruiser91's follow-up #5 above - TCIS has only recently sold its business to OAMPS Insurance Brokers.

In Adelaide, the same staff are still dealing with clients, but not sure whether this applies Australia-wide.

Regards,

Charlie
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Reply By: Bazooka - Thursday, Mar 13, 2014 at 19:08

Thursday, Mar 13, 2014 at 19:08
When our little Mazda was written off (by a speeding drunk) I went to the holding yard and removed everything which wasn't part of the agreed price - including a "fixed" rear window louvre. They simply took the vehicle away without any regard to what may have been private stuff in the cabin and the boot and I had to contact AAMI to chase it up, not the other way around, which was quite annoying. A lot more difficult on a 4WD (winch, bb, etc) but if they haven't insured additions then they 'might' let you remove some of them before they sell it if you ask nicely.

Pretty sure the insurer has no claims whatsoever over remaining rego. At least that's how ours worked - we enquired with the insurer and cancelled it ourselves. Ask your insurer.
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Reply By: Motherhen - Thursday, Mar 13, 2014 at 19:13

Thursday, Mar 13, 2014 at 19:13
I don't know about the legalities of the insurer keeping the rego rebate. Years ago when son's vehicle was a write off, I handed in the plates and got the rebate. The insurance co seemed a bit miffed that they missed out. Son "purchased" the wreck at a fair value. We once purchased back a truck that was written off due to damage to the tipper when tipping a load. We had to meet the highest offer they got from tender. We always declare any additions - even radios and seat covers.

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Follow Up By: get outmore - Thursday, Mar 13, 2014 at 19:26

Thursday, Mar 13, 2014 at 19:26
only thing with delaring all extras and having them listed is theres then no question in the event of a write off the belong to the insurance company, you have no ,leg to stand on if its listed on the policy
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Follow Up By: Crusier 91 - Thursday, Mar 13, 2014 at 19:30

Thursday, Mar 13, 2014 at 19:30
not if you own the salvage rights.
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Follow Up By: get outmore - Friday, Mar 14, 2014 at 08:12

Friday, Mar 14, 2014 at 08:12
All that means is you have to pay to get your stuff back.
If things like spotlights.Hf radio etc arnt listed on the policy you can just remove them from the wreck
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Follow Up By: Crusier 91 - Friday, Mar 14, 2014 at 09:12

Friday, Mar 14, 2014 at 09:12
"All that means is you have to pay to get your stuff back."
Not true.

My policy states "If we declare your vehicle to be a total loss, you may keep the salvage of your vehicle at no cost to you"
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Follow Up By: get outmore - Friday, Mar 14, 2014 at 14:13

Friday, Mar 14, 2014 at 14:13
actually its more like this..

Salvage retention – If your vehicle is over 30
years old and can’t be economically
repaired, you receive the salvage at no cost
to you. If your vehicles is between 15 to 30
years old you may purchase this option
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Reply By: baz&pud (tassie) - Thursday, Mar 13, 2014 at 19:40

Thursday, Mar 13, 2014 at 19:40
Chris K
My wife was involved in a bad accident in November last, totally 150% in the right, and the vehicle was a total loss.
In regards to your opinion 2, here in Tassie if the vehicle is written off the rego refund goes to the registered owner.
In regards to 4, IF you are in the right then the excess is NOT deducted from the payout, but is deducted if you are in the wrong.
In regard to accessories, if you make any alteration to the vehicle from it's standard selling state then the insurance co has to be advised.
baz
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Follow Up By: Member - Chris_K - Thursday, Mar 13, 2014 at 20:30

Thursday, Mar 13, 2014 at 20:30
Hi Baz

In the case of my daughter, the insurance company didn't really offer any assistance in terms of who owns the rego refund. And to be honest, I was just so relieved that she was ok to even think about it. But now that a few months has passed, it got me thinking about how insurance company's calculate their loss, and how it's different to how we as customers calculate ours. In the end - it's only money - and our experience now has made me a little wiser.

She was the last car in a four car pile up...they were all stopped in the middle of the road around a corner...so technically she is in the wrong.

Insurance is a necessary evil...until you need it!

Cheers

Chris
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Follow Up By: Shaker - Thursday, Mar 13, 2014 at 23:31

Thursday, Mar 13, 2014 at 23:31
If you have accepted a payout from the insurer, haven't you in effect sold them the vehicle? In which case they would be entitled to the registration refund. As far as the premium goes, you also may have paid it 364 days prior to the accident.
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Reply By: Member - bill f (QLD) - Friday, Mar 14, 2014 at 01:46

Friday, Mar 14, 2014 at 01:46
Hi, I have noted in fine print of the insurance on my last 3 vehicles, all insured with the same insurer, that when it comes to agreed or market value they pay the lesser value so I just take the market value but make sure I list all additions & modifications.

Will look into agreeing to pay to purchase wreck as I have been ripped off in the past. Bill
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Follow Up By: fisho64 - Friday, Mar 14, 2014 at 03:51

Friday, Mar 14, 2014 at 03:51
If you have agreed value on your policy, how can they pay market if it is less? Assuming it is not a criminally inflated price.
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Follow Up By: Shaker - Friday, Mar 14, 2014 at 08:15

Friday, Mar 14, 2014 at 08:15
You have only been "ripped off" if the insurer hasn't complied with the terms & conditions of the PDS, in which case you could have referred the case to the Insurance Ombudsman.
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Follow Up By: Member - bill f (QLD) - Friday, Mar 14, 2014 at 08:31

Friday, Mar 14, 2014 at 08:31
The "ripped off" refers to buying back wrecked vehicles not the insurance itself.

If the policy states that they pay the lesser of "agreed" or "market" value guess which one you will get. Bill
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Follow Up By: Shaker - Friday, Mar 14, 2014 at 09:52

Friday, Mar 14, 2014 at 09:52
Let me think for a minute ..... The lesser!
You also have the right to ask if you can tender for the purchase of their vehicle, ie "the wreck".

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Reply By: Member - Graham N (SA) - Friday, Mar 14, 2014 at 17:49

Friday, Mar 14, 2014 at 17:49
Hi,
You guys got me thinking, I have now gone a head and insured my 94' Nissan for $6800 plus about $20,000 of accessories (HF radio, 80ltre engle fridge, long range fuel tank, navigation devices etc. all declared).
I presume the insurance company now needs to prove to itself that any repairs to my vehicle, in the event of a accident, would need to be in the vicinity of $26000 before they 'write it off'.
I'll be reading the PDF with interest when it arrives.
Cheers
Graham
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Follow Up By: Member - Chris_K - Friday, Mar 14, 2014 at 18:36

Friday, Mar 14, 2014 at 18:36
Hi Graham

At least they will need to replace all those things declared in the event that your vehicle is written off. But you are right - read the PDS when it arrives, and take time to read all the fine print!

Chris
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Follow Up By: Member - Chris_K - Friday, Mar 14, 2014 at 18:37

Friday, Mar 14, 2014 at 18:37
....or even more importantly - if your vehicle is stolen!
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Follow Up By: Member - Graham N (SA) - Friday, Mar 14, 2014 at 19:37

Friday, Mar 14, 2014 at 19:37
Yes Chris that's what got me thinking, if I had a accident most of the accessories would probably survive but in the case of theft or fire every thing would be gone, the premium seemed reasonable also.
I'll send you a pm with my thoughts when I've read the PDF after it arrives if you are interested.

Cheers
Graham
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Follow Up By: Member - Chris_K - Friday, Mar 14, 2014 at 22:41

Friday, Mar 14, 2014 at 22:41
Hi Graham

Yep would be interested in what you think when the documents arrive. Thanks.

Chris
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Reply By: Sigmund - Sunday, Mar 16, 2014 at 11:30

Sunday, Mar 16, 2014 at 11:30
If you are making a total write-off claim on a market value policy you can challenge the insurer's value estimate by getting ads for equivalent vehicles on the 2nd hand market and submitting them.

I'm a fan of agreed value policies since our vehicles are typically low km for their age and I have no patience for a dispute. That said, some insurer's require evidence of condition and some won't take into account aftermarket fittings. I recently put a shock worth a grand on the motorbike (worth every cent) but the insurer regarded it as a modification and refused to increase the agreed value. Stupid as it reduced both their and my risk.
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Reply By: Penchy - Monday, Mar 17, 2014 at 14:40

Monday, Mar 17, 2014 at 14:40
I have written off a couple of motorbikes (my fault), but I had a car written off that was parked out the front of my house (it was not fully comp insured as it was a very old ZC Fairlane and not worth much). The driver at fault's insurance company took a pre-accident valuation of $500 and offerred me that. I refused that offer as I could not replace the car for that much, and other Fairlanes in the same condition were for sale for $7000, so that it what I would accept. Insurance company refused to pay that as their estimates came from Redbook, which apparently is an average of like cars sale prices in the market currently. I said, "well I'll get my own valuation and you can pay that much". $300 bucks later I had a private valuation for $7000 which I gave to the insurance company, they offered me $4000 so I took that.
A Hilux I wrote off, I asked to have towed to my preferred repairer for valuation, while it was there I removed all items not on the policy before they declared it a write off. I still lost money on that, but if there is a motor invloved you rarely win.
My current vehicle in under insured so I drive accordingly, my insurer won't agree to an "agreed" price, and market price is well under what I think I'll get for it privately.
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Reply By: Echucan Bob - Monday, Mar 17, 2014 at 23:16

Monday, Mar 17, 2014 at 23:16
A few years ago I was reversing into a driveway between two parked cars that hadn't left me much room. I touched one of the cars with my plastic bumper and left a tiny mark on the rear tail gate duco of an old Barina. I dutifully left my contact details on the windscreen of the unattended car, and expected to pay a few hundred bucks for the repair.

I got a bill for $3200. I questioned what damage they were repairing and they sent me a list of the whole back of the car being removed and replaced and resprayed. I queried this and they sent photos of the whole rear of the car being reconstructed. It seemed it had previously been rear ended and the floor panel had been badly stove in. The damaged panels were rusted so had been there for some time.

I explained to the owners insurer that someone was scamming me and that I refused to pay. I re enacted the incident and took photos showing how the damage they were repairing could not have been caused by me. They said "Just pass the claim onto your insurer" and all will be sweet. I said no way. They were most insistent that I pay, but reduced the amount to $2000. I politely told them again to travel and have sex. I was prepared to pay for the damage that I had caused, but was not going to pay (or let my insurer pay) for the fraudulent restoration of a beaten up Barina.

They continued to make threats of legal action, accusing me of all sorts of dishonesty (despite the fact that I owned up to an unwitnessed incident from which many would have just driven off) and in the end I paid an amount equivalent to my excess (which was still far more than the trivial damage I had caused).

The conclusions that I have drawn from this incident are:

a. being honest doesn't pay

b. the panel beating industry isn't squeaky clean

c. not all Barina drivers are honest

d. insurance companies couldn't care less what criminal activities go on as long as they make a profit

Bob

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Follow Up By: Member - Chris_K - Tuesday, Mar 18, 2014 at 08:51

Tuesday, Mar 18, 2014 at 08:51
Hi Bob

Similar incident with my wife who brushed another car. She left details etc...many don't. Cost us our excess of $500 but at least the right thing was done. The solution there is to use your phone and take a photo from a couple of angles before driving off.

I'll bet you would have received a different response if you had said "would you like a copy of the photo"?

Still doesn't make it any easier to swallow.

Chris
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