My Mx-5 and agreed value. What do we know here ....?

Buying a ‘5 and Insurance advice Insurance Advice
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Afternoon all…

I’ve recently got my NC back after a little while it’s been away it’s had under body work rust prevention carried out. Also, a newly built forged engine and also a new turbocharger installation, complete. I have modified coil over suspension, refurbished front and rear subframes and suspension arms with poly bushing.

As you can expect, this has come at a considerable cost to me and in order to protect my investment, I asked my insurers to facilitate a policy to cover an agreed amount in the event of a total loss.

At their request and after providing them with photos and costings to that effect, they basically insulted me with the underwriters estimation of the value.

They suggested obtaining an iaea engineer valuation to qualify this before they’ll agree to my requested agreed figure.

This, in itself, is no big deal other than yet more cost to me but what strikes me as strange is the guy who did the engine/turbo installation, himself and his son both have NC’s to the same increased and well kept spec and he’s confirmed the same insurer only asked for them to fill out a form stating what the mods where and their value is roundabout the same as I’m requesting.
Am I being played here and does anybody have any experience of agreed values and insurance companies ??
For the record, I’m not asking for an agreed value in 6 figures :joy: :+1:

Thanks in advance

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If you have receipts to prove your spend, plus a book price for the base car, why wouldn’t they insure you with an agreed value? Surely it’s similar to just insuring a more expensive car with your premium adjusted to suit (modifications considered of course)
. The premium should be in line with the car, the cover and the value.

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Appreciate your reply Dean. It aligns with my thinking and I don’t know why they’re presenting hoops to jump through.
This will be my 4th year with said insurer and I’ve had no problems in the past.

4

The guy who did the modifications on his own car has qualifications you don’t have. Otherwise, they are just taking your word for it about the quality of any work. Generally, these sort of works devalue a car, especially as effectively DIY. You’re asking the insurers to increase their risk.

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The guy who did the works on his and his sons car owns and operates a legitimate engineering company of near 20 yrs standing and my build/mods was taken on as a proper job, not a part time weekend thing.
So, I doesn’t qualify as DIY, as I see it.
Furthermore, I’m willing to pay an increased premium for the insurer to cover that “risk” as it were.
It’s an agreed annual mileage policy and I’m merely looking to cover the costs that have gone into it in the event of a total loss. I’m asking the insurer to merely cover that.
Surely, that’s not too much to ask I it ?

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For the majority of (car) insurers, what you insure with them is just a product - they hope to have a book of business with little or no “specialties” - i.e. they want thousands of the product and less claims output than there is income. It’s all about loss ratio.

Loss ratios for motor insurance, like other property and casualty insurance, typically range from 70% to 99%. This means that insurance companies are collecting more in premiums than they pay out in claims.

The loss ratio is calculated by dividing the total amount paid out in claims and adjustment expenses by the total amount of premiums earned. One of the principles of insurance is that the premiums of the many pay for the losses of the few!

The net combined ratio (NCR) is a measure of an insurance company’s profitability. It’s calculated by dividing the incurred losses from claims and expenses by the earned premiums.

Here’s some information about the UK motor insurance market:
In 2020 and 2021, the NCR was 90.3% and 96.6%, respectively.
In 2022, the NCR rose to 109.5%.
In 2023, the NCR was 112.8%, the worst year since 2011.

The investors behind the underwriting are looking for a return on equity and if the NCR is above (say) 95% then the ability to make a profit for the investors disappears - leading to a reduction of working capital and rapid premium increases.

Hence the number of posts on here and other car sites about the cost of motor insurance prices at renewal this year.

It may be your current insurer is looking at his current loss ratio and isn’t particularly enthused about offering extra cover over and above their standard level of cover.

If you want to go “outside the box” then its fair to say that you will have to find an insurer willing to listen to the customers more individual needs and a specialist insurance broker will probably be able to offer advice as to which insurance companies will offer what you want.

Before retirement, I was an Underwriter both in Lloyd’s and the Insurance Company marketplace and the drive for profit from equity providers and from the actuaries who overlooked every aspect of the book of business being underwritten coloured the pricing and underwriting physiology by quarter, and sometimes more often!

1 Like
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Thanks Jeff for your more in depth reply…

This bit below makes total sense or else they’d be very soon out of business, obviously.

Again, this I see as a fundamental of the insurance business merry go round.

As for your line above about insuring with them, “a product”, that makes total sense too but when I consider what my requested total loss agreed value figure insured is, it’s not like the cost of a space shuttle, it’s far far less than for example, a couple of year old Ford Fiesta (as an loose example)

I will seek a specialist broker and I will provide the insurer with a detailed valuation from a recognised body of authority.
I just want my invested money to be reasonably protected if the waste product hits the air circulation device, if you follow me.

Cheers

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Unfortunately, the insurer doesn’t care too much about the car itself, they will look at repair costs, driver age vs claim etc etc - the car itself is almost immaterial. It’s a “book” and they look to the end result (profit or loss) rather than the individual “page”. Sorry, it’s tough out there and the individual is just a number! I include myself in the “just a number” by the way - Admiral stopped my Agreed Value policy with 90 days notice.

Interestingly, NASA used Government indemnities for the “hull” of the Shuttle and it equated to about USD 3 per US taxpayer in the event of a loss. Liability (Third Party) was insured commercially.

“Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness.

Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”

― Charles Dickens, [David Copperfield]

Which, by the way, is why I stopped working at age 60 from the underwriting business - you can guess my class of business from my username.

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What I don’t understand is the individual is asking to be insured for a sum. The insurer can weigh the risk etc along with the sum insured and come up with a premium they want paid in exchange for said cover. You’re not asking for anything for nothing, your premium would reflect your requested cover.

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One major insurer, for example, issued in 2023 some 9.4 million policies of which 44% were motor policies - somewhere near 4,000,000 car policies.

There is very limited chance of individual attention for one person’s requirements if they do not fit “in the box” which is where specialist brokers or insurers can assist.

The insurance company in the example above reported a £180+ million loss in 2023

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I’m only talking insurers that claim to offer agreed value policies, surely when doing so they’ll be prepared to offer a certain level of cover for a commensurate certain level of payment - it’s a purely transactional thing. You’re not asking them to simply pay out more if you crash your car, you’re asking them to consider and calculate a premium based on your requirements from the outset in order to cover you for said amount.

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This. Exactly. ^^^^^
But that’s obviously, that’s far too simple a line of thinking.
I wish it could be so.

Thanks

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Ok, so you supplied receipts to the insurers.

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They never asked for receipts, they asked for cost estimates, a list of all mods and a pile of photo’s of the work which is what I sent to them.
They then referred me to the underwriters (same underwriters I’ve had with them for last 3 yrs) and insured me, no problem.
They then came back to me 3wks later with a review offering a paltry sum agreed which was less than 50% of my initial request (and as I thought, the agreed figure) and a suggestion that I get an independent report.

If they had asked for receipts, they could have had them. They never asked.

What exactly are you getting at allied to your “effectively DIY” comment further above ?

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I suggest you get an independant report. Its the usual process. The insurance company has provided you with an estimate of the market value, based on what evidence you have provided, which hasn’t included receipts (even though they didn’t request that, maybe in retrospect you should have). You have your own idea of the market value, and there is a difference in opinion.

In many cases, people seem to get a garage report or see if an owners club can provide this as a service to paid up members.

As stated elsewhere, Agreed Values are not for insuring a car for more than its worth, but in cases where there is huge variability in market values, which is quite common in classic cars. If I spent £1000 replacing the tyres of my Jag, I haven’t increased the market value by £1000 (though I might have made it a bit more sellable).

I’ve noticed more insurers are withdrawing agreed value schemes. I wonder if they sense a collapse in second hand car values, increasing that gap between market value and agreed value.

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Interesting, this year i’m in the process of dropping cover on my old benz to 3rd party fire and theft, its a super old machine and looks and drives as well as it ever did… my experience after many years in the motor trade at senior level is insurers aren’t the most moral or ethical business, they run with the fox and hunt with the hounds… they have a rotten egg amongst their risks the E car fire and explosion risk which is effecting even domestic house insurance cost’s personally i think they walked like many others fairly blindfolded into E risks but the government and those who heralded the E revolution really hadn’t done their homework on something thats been offered as a way to lose the ICE, and until they have a 40T wagon that can get from Inverness to Dover as quickly and efficiently and economically as a diesel they can forget about E power…we eat ,clothe and heat our lives with goods that come on diesel wagons and ships are still going to use black oil… Insurers just want someone else to carry the can they’d be happy with 50% profit and to hell with anyone else…just paid 260 for my 3 classics, all mx5… will

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See my scribblings in the first post.

I was wondering what others had done if they’d been in this situation,
As for your “grands worth of tyres on your Jaaaaag” increasing the market value, that’s a totally and completely different thing to what I’m asking here.
Of course, you wouldn’t expect it to be worth a grand more.
The figures I’m talking about here are much much more than that…

I’m wanting a particular sum insured and it’s obviously way above market value.

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If you join the MX5 Owners Club, you might find the Area Coordinator or other Club Officer might be willing to provide a valuation. A search of the forum will indicate what others have done. Of course, it will cost you £43.

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Appreciate the advice and definitely, I will consider it.
Thanks

1 Like
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