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Crash Course column from July/August 2017 Paint & Panel Magazine.

A recently widowed friend of mine asked me to find a reliable and safe ‘first car’ for her daughter. She was after a small, automatic, five door hatchback with a budget of five grand or a tad over.

After having had the feelers out, a mechanic friend called me with just such a vehicle – a 2007 Toyota Yaris YRS. It fitted the bill perfectly and it only had 60,000km on the clock, plenty of rego.

He was willing to sell it to her for five and a half grand. This generosity saw him forego several thousand dollars profit that he could have made on that particular car.

The mother and daughter were absolutely delighted and upon delivery, the mum used her smartphone to take out comprehensive insurance with one of those high profile online companies.

To my dismay I noticed that the most she could insure the Yaris for was an agreed value of $5800. There was no facility to indicate options, condition, kilometres travelled or to disagree with that amount.

An instant check of used vehicle price guides showed that the insurance company’s agreed value was so wide of the mark it must have been plucked from thin air.

Then a search of a couple of internet car sales sites resulted in not one 2007 Yaris YRS five door automatic available Australia-wide for under seven grand. Indeed equivalent examples were priced beyond eight grand.

Among the biggest gripes people have with their vehicle insurance company is the total loss payout figure after their vehicle has been deemed a write-off.

Most insurance company assessors and claims managers regularly suffer the wrath of a disgruntled client alleging their total loss payout amount doesn’t come close in allowing them to replace their vehicle with one of similar age, condition and specification.

They’re not talking about a deficiency of a few hundred dollars, but thousands and that’s even on humble older vehicles.

Additionally, once the premium paid and the substantial excess for an inexperienced driver, if that’s also the case, are factored in, the financial loss is considerable. It’s no wonder then that the general feeling is one of being ripped off.

The smash repair industry also falls victim to this rort of undervalued cars. Assessors are regularly obliged to deem quite repairable propositions a total loss as a result of insured values way out of touch with the market.

These jobs, which disappear over the horizon to the salvage yards, are often the cream of repairs for the well-resourced workshops.

Part of the problem stems from the fact that in order to minimise their “losses”, which they’re fully entitled to do, the insurance companies have been seemingly taking advantage of the inexact science of valuing used cars.

This is exacerbated by the marked differences in the total loss payout figures between market value and agreed value policies and what each of the insurance companies are using to arrive at their figures.

So in the interest of fairness, perhaps a solution could be scrapping the whole market/agreed value caper altogether and substituting it with an independently calculated value for each comprehensively insured car.

A used car’s current cash value depends on a number of factors including the vehicle’s age, kilometres travelled, condition, trim level, optional equipment, the region it’s being sold and even colour.

Hard data with all these factors taken into account is readily available from consumer sales, wholesale auctions, sales by independent and franchised dealers and other transactions.

Surely then, someone (apart from insurers) could develop a constantly updated app that utilises this data and configures it in such a way that when specific details about a car are entered, a real market value to within, say, five per cent could be arrived at.

This alone would stop the variation in values between them.

Some may argue that valuation guides do this job.

While they are helpful for obtaining an approximate wholesale and retail value, they’re not particularly good at reflecting the true state of the market for specific cars at a given point in time.

All comprehensive insurance policy holders would need to do is to supply the specific details that are needed for a real market value.

The car's condition, which is subjective, would have to be addressed separately by each company. As is the case presently, no market value would be stated on the policy.

However, curious clients could be given the current market value from the app as an indication upon request.

At the time a car is deemed a total loss, the insurance company’s representative, would enter the specific details as declared on the policy into the app to obtain its real market value.

In theory that amount should be adequate for the client to replace the car with a similar one.

Accountability and evidence are expected of professionals in most industries. It’s about time this is also expected from insurance companies when it comes to values that are put on cars they insure.Whad’ya mean my old car’s a write off?!

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