INSURING THE CAR

Hawke's Bay Tribune, Volume XVIII, Issue 198, 4 August 1928, Page 14

INSURING THE CAR

INSURED VALUE OR REPLACEMENT VALUE. On becoming possessed of a motorcar the owner naturally insures it, and is under the impression that he is fully protected, but whether his insurance is going to give him the fullest protection and value is quite a different story. Often insurance policies are couched in language as intricate to the layman as that of a lawyer’s draft, and one may be quite certain that insurance companies, like banks, do not take many, if any, needless risks of losing their money. There are several rather misleading things in insurance policies that should be made quite clear before deciding the policy to be taken out. Many people are under the impression, for instance, that if they have insured a car for a certain total sum, say £3OO, £5OO, or more, in the event of total loss or damage the insurance company will pay the full amount stated in policy. But unless special care has been taken to arrange this matter when the policy is first taken out, or subsequently at removal time it will probably be found not to be the case at all. The insurance company usually promise to pay what they call the “replacement value” of the car. This would not be much hardship if the term really implied what it usually does to the average person; that is to say, the amount for which one could buy a car similar in all respects to one’s own car in regard to make, horsepower, condition, style, age and so forth. But this is not what it means. What most insurance companies call “replacement value” is the price at which one can sell the car in question second-hand. Thus a certain 1923 touring car that was bought for £365, the current price of the year when new, is quoted in the second-hand lists for this year at £ll5, which will be the amount paid as replacement value against' the £365 or a trifle less, that most people would expect to receive, since that figure appears on the policy and the insurance premium they have I ten paying each year is partly bas’d on that value. If this is the case the wording in the policy will read something like this; “. . the company may repair or replace the said car or any part thereof or pay to the insured its reasonable market varan in the time of such loss or damage, but, the value as stated in the schedule hereto shall be the maximum amount payable by the company in respect of loss of or damage to the said car and its accessories.” The best step to take to prevent one thus feeling dissatisfied in event of total loss (and car thieves are becoming more name rous daily) is to get the amount of the replacement value agreed on in advance and to have it inserted plainly in the policy, so that there can be no doubt or dispute about the matter later. Each year at one ienewa] of- the policy this amount, should be adjusted to allow for depreciation. and so forth. Insurance companies know exactly where they stand in respect to their policies and exactly what they are liable for. but how often is it that the insured person also knows—unless it is when it is too late.