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Evaluating old cars for insurance purposes is tricky business

Jeff Glucker August 7, 2017 All Things Hoon 11 Comments

Benjamin Hunting is a Canadian automotive journalist whose work you might read at places like Roadkill or SlashGear. He’s a friend of the site, and I’m personally a fan of the cars that Ben owns. His daily driver is a first-generation Cadillac CTS-V, but it’s his track machine that I find most appealing.

Ben has the gorgeous Datsun 240Z you see pictured above. It’s setup exactly how Ben wants it, and he drives the thing in anger on race tracks. His goal was to mimic the style one might’ve found on a Japanese weekend-warrior street and track machine from the 80’s or 90’s. It’s this aesthetic he’s wanted, and he’s worked hard to get there with his car.

Recently, Ben had the car evaluated for insurance purposes. To have his Datsun properly insured, the insuring company requires an evaluation. This means someone would come to Ben’s garage and pore over the details of his beloved machine. The problem there though, is that a car setup in this manner doesn’t exactly fit into any predefined boxes.

It’s a car that won’t be valued properly in the eyes of the person who’s pieced it together. Is it worth what Ben thinks it’s worth, what the insurance company decides it’s worth, or ultimately what someone else would pay for it in the marketplace should Ben ever decide to sell it?

It’s a tough call and arguments could be made on all sides. Read about Ben’s thoughts on the matter over on his personal blog. (There’s more pictures of the Datsun over there too)

[Image “borrowed” from Ben’s blog]

  • Agreed Value policies need to be opened up to cars driven for more than leisure.
    I’ll gladly pay more to know that in the event of an accident I’ll be able to recreate or properly fix my ride.

    • Smaglik

      Agreed. I had to go with an agreed value policy on one of my vehicles. It’s a 2003, but one the market value starts to exceed actual cash value by 20-30% or so (arguing range with the insurance company, imo), you really don’t have much of a choice, unless you look to pucker up every time it comes out of the garage.

      • Did you have to go with a plan that limits your use of the vehicle?
        The only plans I know of seem to be pretty specific-use 🙁

        • Smaglik

          I spent about 6 wks searching for a policy, and ended up going with one through a Corvette owners club (the vehicle is an E39 m5 with a shade under 50k miles on it). I get 6k miles a year, for pleasure, club events, and work, twice a week. I’m directed I can’t use it for general transportation. I think that means I can go to the grocery after work, but not just directly to the grocery. I also must have another vehicle as my daily. I could not find a plan that allowed me to use it as a daily driver with agreed value. Some of the guys on the M5 board claim they have one, but I’m pretty sure they’re not being honest with the insurance company. That’s a first.

          Price was about 30% higher than I was paying for actual cash, but my agreed value is 38k, and blue book was low twenties, last I checked. I’m no longer scared to drive it.

  • outback_ute

    It is an interesting area, and very tricky when you get down to nuts and bolts. Eg would he deduct the cost of paint & body work from the value?

    While the car is ‘presentable’, it isn’t a full paint job’s worth less valuable. Same goes for any type of repair. A partially worn clutch, or set of brake pads don’t reduce the value by their full amount because it will likely be months or years before that work is needed. Otherwise where do you stop, the amount of fuel in the tank?

    On the other hand, he has to accept that performance modifications on the whole add very little value to the car. Some people will be turned off completely while others will pay more – depends a lot on what the car is, some lean more towards tuning/mods/hot-rodding, others originality. If the value is in the track-related parts, make sure you retain salvage of the wreck!

    A friend had an issue when someone ran into the Morris Minor panel van he uses as his work vehicle but looks after very carefully. Because it was a near 50 year old vehicle the other party’s insurer valued it at a couple of thousand and wanted to write it off. He responded with “if you can find one of these for sale for $5k in good condition I will buy half a dozen”, and showed several recent sales in the $10-15k range. His van was repaired!

    • Sjalabais

      That is essentially the first commandment of insurance claim settlements: Don’t be satisfied with the initial offer. I know a guy in Germany who had a pristine 1998 Volvo V90. It was flooded while parked in a private, otherwise safe garage belonging to his apartment block. When he met his agent afterwards, he said the agent had a good understanding of what the car was, and told him: “I know you find these for 1k€, but this is not what your car is about. We’re working on it”. If I remember correctly, after a bit of back and forth, he got 18k€. That is excellent, and he is currently restoring the car again in the most meticulous way.

      It’s really not that different from selling a special interest car either. You’ll find heaps of car guys on BaT stating all day that this or that car either is a non-deserving “BaT-car”, ridiculously overpriced this, wouldn’t-take-it-for-half that – but at the end of the day, there’s usually one or another who can agree with the seller on a value both can live with.

      • outback_ute

        That is a pretty extraordinary result for the Volvo, surely beyond market value! In my mate’s case it was a simple discrepancy between what the guides that only depreciate cars said and the real world value.

        It must have been like a 240 I saw years ago, 10 years old with under 5k on it and in as-new condition, owned by a 240 fanatic. It was one of the last cars and he was keeping it as a museum piece.

        • Sjalabais

          Depends, the last 940 and V90 (1997-1998) can be priced real wild. I see some pop up for 20k €, had one locally for almost 25k € disappear from the classifieds after days. And some people really do excel at keeping cars pristine, rather than driving them.

    • Vairship

      I think it comes down to one specific problem: the owner knows exactly what he wants the car to look like, whereas the valuer only cares about what the car would sell for right now. The owner MIGHT be able to sell it for more, but he’d probably have to have it for sale for years to find that one other person that’s also willing to pay for “like it just came off a Japanese race-track in the 1980s”.

  • If you’re leaving the mainstream path, don’t be surprised if you don’t get the mainstream treatment anymore.
    For the lower part of the market, the value is altered by doing/not doing expensive things to it (fixing rust, paint, stop the dripping, a couple of new parts – all that costs money). If there is no fresh paint but rust instead, the relative value of a cheap-ish car is lower, since the rust will eat it more and more over time. Keyword is “preservation” – you’re taking a cultural asset under your wing. That’s the mainstream definition of “classic car”.

    So you add expensive performance bits, add a shortshifter kit, and take it around the corners quickly.
    You’re now catering a niche market, and are using up an elderly chassis. While I’m personally convinced that “they’re meant to be driven – they are cars“, this is not what is expected by “them”.

    My insurance requires a daily driver, and will insure a “veteran” (>30yo) up to 4kUSD in value and 2kmls/a for about 66USD. Between 4kUSD and about 35kUSD, they want to see photographs (each side, engine bay, interior) to proof that the general state is along the insurance value. Only for more expensive cars they’ll send a guy – which is usually sourced from the local branch of a relevant club, so they are more familiar with the different aspects of exactly that kind of car, such as track tools, rat rods, or Gulf liveries… Classic car insurance heaven!