Changing the value of your car for cheaper insurance

Dkhuts

Just wondering if giving the wrong value for your car for cheaper insurance is considered as insurance fraud? For example if i value a 2008 honda civic at 25k instead of 3k my insurance drops by about 200 quid. Obviously they wont pay out the 25k incase of a claim but would they consider that as fraud? Could argue that i have no idea about my cars worth etc.

kirving

If the information you provide is grossly incorrect, the insurance company could use it as a means to deny your claim.

If you had bought the car for €25k 3 years ago, and you left it at that, even though it's now worth €12k, you would probably be OK to claim you had no idea.

Dkhuts

Kevin Irving wrote: »

If the information you provide is grossly incorrect, the insurance company could use it as a means to deny your claim.

If you had bought the car for €25k 3 years ago, and you left it at that, even though it's now worth €12k, you would probably be OK to claim you had no idea.

Yeah that's fair, so lets say i bought it for 3k but put it down as 5k in order to decrease the premium it should be ok considering some of those cars go for round 4k

SullieN

Dkhuts wrote: »

Just wondering if giving the wrong value for your car for cheaper insurance is considered as insurance fraud? For example if i value a 2008 honda civic at 25k instead of 3k my insurance drops by about 200 quid. Obviously they wont pay out the 25k incase of a claim but would they consider that as fraud? Could argue that i have no idea about my cars worth etc.

I noticed this also when getting quotes. I contacted the insurance company (liberty in my case) and asked what happens if I over value my car.

Their response was that it is ok as they ask for an estimate. They said it ok to overvalue the car but detrimental if you undervalue it as they will give the lower of your estimated value and the current market value if your car is written off.

My car was worth 2k and I put a value of 10k.

Dkhuts

SullieN wrote: »

I noticed this also when getting quotes. I contacted the insurance company (liberty in my case) and asked what happens if I over value my car.

Their response was that it is ok as they ask for an estimate. They said it ok to overvalue the car but detrimental if you undervalue it as they will give the lower of your estimated value and the current market value if your car is written off.

My car was worth 2k and I put a value of 10k.

Yeah either way theyre gonna pay for whatever you valued the car or whatevethe market value is (depending which one is lower). So if i insured it for 300 quid even though its worth 3k theyll only pay out 300. Yet if i insure it for 10k and i claim, theyll pay out for the market value. So id be safe to insure the car for well over its worth?

SullieN

Dkhuts wrote: »

Yeah either way theyre gonna pay for whatever you valued the car or whatevethe market value is (depending which one is lower). So if i insured it for 300 quid even though its worth 3k theyll only pay out 300. Yet if i insure it for 10k and i claim, theyll pay out for the market value. So id be safe to insure the car for well over its worth?

Yes, that's what the person I was talking to on Liberty's web chat said. I have a copy of the chat script though just incase. I'd recommend you to contact the insurer as well just to be on the safe side.

when I asked on the web chat I played dumb and said I have no idea what the car is worth. The person then explained that they pay the lower amount of my valuation and the current market value. So he advised me to overvalue it.

I then said I'm not sure of the value but I know for a fact it's less than 10k so if I value it at 10k just to be safe would that be alright and he said yes that's fine.

coylemj

There are two scenarios here.....

1. If you overvalue the car, you will be wasting money paying for too much cover because if the car is written off, they will only pay 'market value', regardless of how much you claimed it was worth. So you need to keep the value to a realistic number.

2. If you undervalue the car, they will apply a discount to any claim for damage under a fully comp. policy. Say the car is actually worth 12k but you only value it at 8k, that means you only have 2/3 cover so if you crash the car into a tree and cause 6K damage, they will only pay you 4k based on the fact that car was only 2/3 insured. That won't apply if you are claiming off someone else - it's none of his business how much cover you're paying your own insurer for.

Worth noting that the principle outlined in 2. above also applies to your house insurance.

SullieN

coylemj wrote: »

There are two scenarios here.....

1. If you overvalue the car, you will be wasting money paying for too much cover because if the car is written off, they will only pay 'market value', regardless of how much you claimed it was worth. So you need to keep the value to a realistic number.

2. If you undervalue the car, they will apply a discount to any claim for damage under a fully comp. policy. Say the car is actually worth 12k but you only value it at 8k, that means you only have 2/3 cover so if you crash the car into a tree and cause 6K damage, they will only pay you 4k based on the fact that car was only 2/3 insured. That won't apply if you are claiming off someone else - it's none of his business how much cover you're paying your own insurer for.

Worth noting that the principle outlined in 2. above also applies to your house insurance.

You'd be surprised but sometimes increasing the value of a car is actually cheaper. My premium went down from 1,200 to 800 by changing the value of my car from 2k up to 10k (When i increased it over 10k it started to rise again).

I assume there is an increased proportion of cheaper cars involved in crashes. As younger drivers are more likely to be involved in a crash and generally younger drivers buy cheaper cars.