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Underinsurance threat to classic car owners

Posted on 31-10-2014

Soaring classic car values could leave unwitting owners seriously out of pocket in the event of an insurance claim, according to the country’s largest specialist broker.

Adrian Flux Insurance Services has written to thousands of policyholders it fears are at risk of underinsurance as the rising value of their vehicle has left their insurance cover woefully inadequate.

Ongoing analysis by the Historic Automobile Group shows that over the past decade overall classic car values have risen by 430 per cent, partly driven by wealthy investors putting their cash into tangible assets instead of volatile stocks and shares.

But, while this rise is distorted by massive increases in the most desirable blue chip cars like Ferraris, Bugattis and Bentleys, more humble classics have also been affected by the surge in values.

And while that’s good news for those in possession of anything from a mark one Ford Escort to an E-Type, it’s also cause for concern.

Gerry Bucke, general manager at Flux, said those who have owned their cars for a number of years and have rarely reviewed their car’s value are particularly vulnerable.

“We reviewed our classic car portfolio, and noticed that a number of our customers had declared values that looked very low in today’s market,” he added.

“We can’t suggest actual values, but we wanted to make sure our customers were adequately insured so wrote to them suggesting they review the value, perhaps by looking at price guides and similar vehicles for sale.

“Some of the cars have almost doubled in value since the owner’s last valuation, and underinsurance works on classic car insurance - where the premium is partly calculated based on the value - in a similar way to home insurance.

“So owners could end up only receiving a percentage of the car’s true value, and we can’t stress enough how vital it is to keep on top of the market trends. We’d suggest reviewing valuations every year. Otherwise, if the worst happens, you could lose anything from a couple of thousand pounds to tens of thousands.”

Darren Campbell, a Surrey-based motor engineer, bought his 1970 Porsche 911S 18 years ago for just £8,000, and for the past few years it’s been insured for £45,000.

“I hadn’t used it much for the past couple of years, but now I’ve started using it again I decided to look up what it was worth because I thought it must have increased,” he said.

“It was a pleasant shock when I realised it was worth about £80,000 - and I’ve seen some go for near £100,000.

“I think if you’ve bought one of these quite recently you’re more likely to keep an eye on the market values, but if you’ve had it for as long as I have it’s easy to take your eye off the ball.

“I’ll be keeping track of it every year from now on.”

Craig Brewer, from Essex, increased the value on his rare 1970 Lotus Escort from £25,000 to £40,000 after receiving a letter from Flux.

The car is undergoing a restoration, and could be worth more than £60,000 when complete.

“I knew its value was more than I had it insured for, but the letter prompted me to increase it. These cars are better than money in the bank - this is going up all the time without even touching it,” he said.

Retired antiques and furniture dealer John Hodgson paid £5,000 for his 1969 Daimler 250 V8 about 15 years ago, and had it insured for £12,500 until recently.

Now, following an up-to-date valuation, the fully restored car is covered for a value of £37,500.

“I’ve just had the bodywork and paint done, so I knew the value needed to be increased,” he said.

“I had it professionally valued and I was a little surprised at the figure, but that’s since been backed up by another garage where I’ve had work done. They’ve always been valued below the Jaguar mark two, but prices are now creeping up. I’ll be keeping an eye on the higher prices they now go for.”

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