Johannesburg, May, 2013 – Alexander Forbes Insurance (AFI) is advising purchasers of used vehicles to take special care not to pay an inflated price when purchasing and highlights the importance of insuring for the correct values.
They recommend checking the Trans-Union Auto Dealers’ Guide, to assist in determining a fair price of a used vehicle before purchasing.
Generally the insurance industry will use this guide to decide a settlement value on write off and to adjust vehicle values on policy anniversary date. Your insurer will be able to advise what the Auto Dealer Guide says for your vehicle.
AFI MD, Gari Dombo suggests the following tips before purchasing and valuing a vehicle to avoid any nasty surprises in terms of later claims:
· Don’t make your purchase decision based on a cursory review or the aesthetic appeal of the vehicle only. Research the vehicle thoroughly; be aware of the mileage, accident history and roadworthiness of the vehicle.
· Ask about all features in the vehicle as this can affect its value.
· Test drive the vehicle and ask a mechanic or car guru to examine the vehicle
When you contact your insurer to insure the vehicle be sure that you give accurate details of the make model and year of first registration, and the mileage. Also be sure to give details of the after-market accessories and their values that you wish to insure.
Most insurers use retail replacement value when determining a settlement value for vehicles. Some insurers will use the average between trade and retail value, as the basis of settlement. Check your policy to see what your basis of settlement is so you can take that into account when setting your vehicle sum insured.
According to Alexander Forbes policies, a vehicle is written off if the cost of repair exceeds 70% of the retail value of the vehicle or 70% of the sum insured if that is less. In the case of hijacking or vehicle theft, the vehicle owner will be paid out as if the vehicle was written off.
“A car is often the second most expensive purchase a person makes, so correctly valuing your vehicle is especially important in the event of a write-off, hijacking and theft claims,” concludes Dombo.