Part of the new normal that we have all become used to is the unprecedented impact of world events on the value of vehicles.

From the humblest hatchback to the most exotic sports car, the traditional depreciation model has been swept aside, with values of some used motor cars increasing by up to 50% compared with pre-pandemic levels.

What does this mean for your insurance cover and how can Lockton help?

We are pleased to be able to announce that, with immediate effect, we are able to provide agreed value cover automatically under our policies. This is due to market value-based cover being capped at the value declared by you and shown on your schedule.

This means that the figure shown for your car's value will be fixed for the policy period and this will be the amount payable if the vehicle is totally destroyed in an accident or fire or stolen and not recovered.

But how does this work if values continue to appreciate? The motor industry is reporting that the current status may continue for some months. Our solution is as follows if your vehicle is declared a total loss following an accident or fire or stolen and not recovered.

For cars up to 24 months old

The policy will replace your vehicle with an identical new one of exactly the same type and specification OR pay up to the agreed value if it is higher than the cost to replace with a new vehicle. This means that if your vehicle has appreciated, you can be sure that you will not suffer financially as the policy will replace your vehicle.

For cars between 2 years and 15 years old and worth below £750,000

The policy will pay up to 150% of the agreed value to replace your vehicle with a comparable replacement.

For cars between 2 years and 15 years old and worth more than £750,000

The policy will pay up to 125% of the agreed value to replace your vehicle with a comparable replacement.

For cars over 15 years old

The policy will pay up to 125% of the agreed value, or £250,000, whichever is less, to repair the vehicle to its pre-accident condition.

If your vehicle is partially damaged following an accident or other insured incident, the insurers will pay up to the agreed value figure for the car to be repaired to its pre-accident condition.

How does this work?

  • Firstly, speak to your usual Lockton contact. They will be able to guide you through the process. Lockton is not a valuer of vehicles, but we are able to validate data supplied by a third party. This can include motor industry price guides such as Glass's, resources including www.glenmarch.com and valuations provided by professionals.
  • You can also talk to your car club. Most clubs will be able to provide you with a valuation which we can then validate to arrange agreed value cover.
  • Some car dealers will assist you with a valuation. A recent purchase receipt can be used as the basis of value although market fluctuation should be factored in.
  • If your vehicle is brand new, then the value is simply based around the vehicle's sale price to you – in other words, the figure which reflects the cost of the car as delivered to you and factoring in all options and specifications choices.

How does this differ from Market Value?

In simple terms, Market Value will show a value on your policy schedule and this will be the maximum amount payable in the event of a total loss; there is no provision for any payment above this figure.

With an Agreed Value policy, the insurer commits not only to settling a total loss claim on the figure agreed initially but builds in the provisions referred to above to extend the protection available.

Lockton does not charge any extra premium for an Agreed Value policy so there is no financial disadvantage in arranging your cover in this way. It is also available for brand new vehicles and can reflect highly individual and personalised specification.

We hope that this helps you understand an often-used term within the motor insurance market. Lockton would be delighted to review your existing policy cover without obligation and provide you with a comprehensive and cost-effective solution.

 For further information, please contact using the details below.