Insurance question

[Buckman]

Our caravan is coming up to its fifth anniversary since purchase. Up to now we have always had the new for Old policy. Currently a new caravan would be 25% more than what we paid for it in 2017. It is rumoured that the new 2023 models will be in excess of 33% more and I am guessing that the New for Old policy increase will reflect this.

If we go for market value putting the market value at the original price paid for the caravan and the insurance company accepts this, if we later have a claim and the insurance company offers us less than the market value we stated on the application which they accepted, could we be forced to accept that offer or are we entitled to the market value for which we insured it?

 

[RogerL]

Our caravan is coming up to its fifth anniversary since purchase. Up to now we have always had the new for Old policy. Currently a new caravan would be 25% more than what we paid for it in 2017. It is rumoured that the new 2023 models will be in excess of 33% more and I am guessing that the New for Old policy increase will reflect this.

If we go for market value putting the market value at the original price paid for the caravan and the insurance company accepts this, if we later have a claim and the insurance company offers us less than the market value we stated on the application which they accepted, could we be forced to accept that offer or are we entitled to the market value for which we insured it?

Market value is the price at the time of the claim, unrelated directly to the price you bought it for - market value is always subject to negotiation during a claim, the insurer may give a low offer but if you can show that equivalent caravans are on sale for more (adjusted for no p/x in the event of a write-off) then they'll increase their offer - they won't normally go higher than price used on the proposal which can be a problem if used prices are rising as they did for a couple of years.

 

[ProfJohnL]

Each insurance company will have their own rules about the way such matters are handled and they will be defined in their T&C's. or general company policies. Read them to find out.

But when it comes to market value of goods, its not what you paid for it, its what its value is as RogerL has described.

 

[Buckman]

Market value is the price at the time of the claim, unrelated directly to the price you bought it for - market value is always subject to negotiation during a claim, the insurer may give a low offer but if you can show that equivalent caravans are on sale for more (adjusted for no p/x in the event of a write-off) then they'll increase their offer - they won't normally go higher than price used on the proposal which can be a problem if used prices are rising as they did for a couple of years.

At present second hand caravans are selling almost for the same price paid 5 years ago when new. So if I insure for the current market value and the bottom drops out of the market several months later I am paying way over the odds as insurance company will only pay out value at time of claim and not at time of application?

I know that the CAMC will insure New for Old up to 10 years old, but premium will probably be sky high? Maybe better to pay the extra premium? A bit of a dilemma?

 

[RogerL]

At present second hand caravans are selling almost for the same price paid 5 years ago when new. So if I insure for the current market value and the bottom drops out of the market several months later I am paying way over the odds as insurance company will only pay out value at time of claim and not at time of application?

I know that the CAMC will insure New for Old up to 10 years old, but premium will probably be sky high? Maybe better to pay the extra premium? A bit of a dilemma?

The theory of market value is that you can use the money and go and buy an identical caravan, in the same condition as yours - if the market falls significantly, you'll be buying the replacement much cheaper.

 

[Dustydog]

Market value basis of settlement has been the Industry standard for decades. Some bright spark thought up “new for old “ , originally for the first year only. Then many offered a 10 year N for O.
If you only want recompense for the market value on the day of the accident go for the MV cover. If you want a brand new replacement pay the extra premium

 

[Raywood]

There is no right or wrong answer to this, it is simply a matter of opinion. You need to actually look at the premiums for both and see if you feel the extra for replacement as new is worthwhile to you.
I am afraid with market value as we have no crystal ball you do need to go for the current second hand value or risk losing out if the values remain high. You should also note that if you deliberately underinsure any claim may be adjusted down to reflect the difference, if this is serious.
When looking at replacement as new though do be aware that if parts needed for a repair are not available you may only get the labour cost and the last list price for the parts. Personally as inflation would have increased this, interest should be added but this is not in the policy wording.

 

[Buckman]

There is no right or wrong answer to this, it is simply a matter of opinion. You need to actually look at the premiums for both and see if you feel the extra for replacement as new is worthwhile to you.
I am afraid with market value as we have no crystal ball you do need to go for the current second hand value or risk losing out if the values remain high. You should also note that if you deliberately underinsure any claim may be adjusted down to reflect the difference, if this is serious.
When looking at replacement as new though do be aware that if parts needed for a repair are not available you may only get the labour cost and the last list price for the parts. Personally as inflation would have increased this, interest should be added but this is not in the policy wording.

The price of the same caravan has increased by £13000 or almost 40% in the space of 5 years which is a massive jump by any standards.
In addition, if we did go new for old, we would wait nearly a year for a replacement as they are still trying to fulfil 2022 orders for caravans ordered last year at the Oct show.