Scheduled maintenance is planned for June 13 at 4pm, during which time the site will be temporarily unavailable.
.png)
Firstly, I offer my apologies, because this is going to be another article about the little mentioned pandemic. I’m sorry… but it effects everything, including your car’s value. So, let’s take a dive into what is driving prices for vehicles in New Zealand and then the things we do at Caveo to look after your hunk of metal depending on what insurer you are with.
Along with resource, production and shipment delays which have all effected the supply of new cars, used cars being imported and fixing broken ones, the pandemic has also created a sense of adventure within New Zealanders. While daily driver cars rise in value due to the supply issues, vehicles like Utes, vans, 4WD’s and campers have experienced a massive surge in demand as people stay local and explore their backyard. Ditching risky overseas travel for a vehicle which they can deck out or pack up the whole family and go anywhere.
Although you’ll be smiling when you go to sell one of these cars that has managed to hold if not increase its value, there is a downside in that you’ll see slightly higher insurance premiums while you hold onto it, as the average price per claim goes up for the very same reasons. Parts delays and then subsequent shipping delays mean that the insurer pays more for each claim, which leads to them passing on the bill with premiums.
Most of the other things we insure normally go up, so why are cars different? As you’ll know with your house Insurance, your insurer raises your sum insured a small percentage each year to ensure you can rebuild the house in the event of a full lose, given changes during the year in building costs, inflation and any other fluctuations. Your Contents are also raised at renewal, accounting for a small number of purchases throughout the year. Your car differs because most insurers offer a market value policy, so instead of choosing exactly what you want to be handed in the event of it being written off, you pick a number within the current market value range, and then that is the maximum you will be paid in a claims situation. Agreed value policies do exist but they are getting rarer and more expensive in New Zealand, this is where you put a number on your vehicle, pay the corresponding insurance premium, and then you get that full amount in the event of a claim.
If you’re with a direct insurer like State, AA or Tower, and on one of their market value policies it is up to you at renewal each year to check that what you’ve got your car insured for is an accurate amount. Otherwise, you’ll be paying the premium for a sum insured amount way over what you are ever going to get as a settlement. With car prices going up it’s now becoming a case of are you cutting yourself off by having too low of a sum insured. If your sum insured was set at $20,000 two years ago, and the car is now valued at $22,000, that is $2,000 that you will not get in a claims settlement, simply because it hasn’t been updated.
In the past we checked to make sure you weren’t over insured with vehicles, as it was often the case where we would get a client’s vehicle that has not been checked in a couple of years and they would be paying for a sum insured up to 3x as much as what the vehicle was worth. If these things aren’t checked regularly, it can also lead to a big shock at claims time, because that car you bought new at $20,000 might only be worth $8,000 five years later. It is now more common that we see cars underinsured compared to their market value, making the checks we make on your cars market value at each renewal even more important, starting the conversation on whether we need to slightly shift your sum insured so you aren’t paying for too much, or too little. Trade Me can be a good start to see what out is out there, but it is not a reliable source for basing your car’s values off. At Caveo we use Redbook as it is recognised and built in to all the leading New Zealand insurers, which gives a high and low range for each year, make and model. The low figure reflecting a car in below average condition with high kilometres on the clock, and then a car in great condition with low kms for the high figure. This all helps to give us a fair idea of what you should be expecting in a claim, because it’s not really a time you want any surprises.
Start with looking over your policy and double checking when you last updated your car’s sum insured, if you’d like a second set of eyes, already know you’d like to make a change, or simply want to chat, give Joshua or myself a call and we’ll see what we can do for you and your hunk of metal!
Have realistic expectations about what your car is worth if you’re on a market value policy, or shop around and find an agreed value policy if you’d like the certainty but don’t mind the heavier price tag.
Ben.
Disclaimer: This post is intended as general advice. Before you make any decisions, discuss your situation with an adviser from Velocity Financial, and seek advice from professionals, such as a lawyer and accountant, to find the best solution for your unique situation.
Read our disclosures on our website:
https://www.velocityfinancial.co.nz/disclosure-statement