When choosing your motor insurance, you should always consider other factors besides (and beyond) price. A critical element of this includes how the insurer will deal with a claim, both during the repair and once it's been completed.
The belief that insurers will always attempt to reduce the value of your claim is widely held, however, the simple truth is that one of the key purposes of an insurance policy is to put you back in the same financial position you were in before the claim happened.
In this, our latest article focussing on what sets Lockton apart from other insurers, we will be taking a look at what happens after your car has been repaired following a claim, and how our policy is designed to help you beyond simply making sure that your car is returned to its pre-accident splendour.
Damaging your car isn't a pleasant experience. Previously we've outlined how our policy deals with repairing cars correctly - but what happens after your car is repaired, and specifically, the potential impact on its value once it's returned to you?
A repaired vehicle will usually be worth less than one which has never been damaged. If a car has been repaired by the manufacturer, either directly or through their network, then it is likely that this will be recorded and this information could subsequently be made available to a potential buyer.
It's also worth highlighting at this point that a motor trader is legally obliged to declare previous accident damage, if they are aware or could reasonably be expected to be aware, to a purchaser. A private seller is under no such obligation.
If the incident was not your fault, then you may be able to pursue the party whose fault it was as an uninsured loss, but this could take time and leave you out of pocket. Most motor insurance policies will specifically exclude 'loss of value' as they focus on physical loss and damage to the vehicle and repairs or replacement only.
Lockton's policy addresses this by including cover for diminution of value as standard - but how does this work in practice?
Thankfully there are many aspects of insurance which are simple and this is no exception. In order to establish a loss of value, we need to set this figure before the claim ever happens and an 'Agreed Value' based cover will do this. This can be established either by way of a valuation or invoice for a new (or newly purchased) vehicle.
In the event of a repair and subsequent revaluation (at a lesser figure) which relates directly to the fact that the car has been repaired and not a change in market conditions, then it has lost value.
How does this work in practice?
If you have owned the vehicle for less than two years, or it has been independently valued within the previous two years, and it is subsequently valued at a lesser amount, then our policy will cover this loss in value.
It will pay the difference between the pre and post loss agreed value at either up to 100% of the repair cost or 25% of the agreed value, whichever is the less, up to a maximum of £500,000.
It is important to note that this is only available for vehicles over fifteen years old and relates to claims for partial damage only – a total loss type claim would be dealt with based on the agreed value.
Many motor policies simply won't cover any reduction in value, regardless of how it's been caused.
We appreciate that this subject can seem quite complex, that's why the Lockton Performance team are ready and able to answer any query you may have – please don't hesitate to get in touch with us.