How to get the right 4x4 insurance

GIVEN how much most of us spend on modifications and accessories to ensure our 4x4 rig is set up just right for our needs, getting the right insurance cover isn’t as simple as a regular car.

The challenge lies in how individual and customised each setup becomes, so that the outcome you want is an appropriate level of insurance cover against the unexpected, whether that be a minor bingle or having your pride and joy stolen or written off.

GETTING THE SUM INSURED RIGHT

THERE are two key things that should factor into your sum insured as a 4WDer: the value of the vehicle itself, and the value of the modifications and accessories. Ideally, the sum insured you choose should reflect the sum of both of these individual items if you want to be confident that you’ve got your sum insured right.

As far as the vehicle goes, there are a range of ways you can get a feel for the value, ranging from Glass’s Guide to Red Book, or even browsing websites like WhichCar.

Modifications and accessories can be a bit more difficult to value. One method is to consider the full replacement value of the items when new. At the other end of the spectrum, you could apply depreciation to get to what the item might be worth now (e.g. a set of driving lights cost you $800 three years ago, but are now $560 given they are three years old). Each method has its own implications outlined below.

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Calculating the full replacement value is as easy as working out what you paid for each item. The benefit of this method is that if your vehicle is written off or stolen you could end up with a payout that is much closer to the cost of replacing everything. The downside is that you’ll pay a bit more for your insurance each year, but that is the trade-off for peace of mind.

APPLYING DEPRECIATION TO MODS AND ACCESSORIES

IF you choose this method, you’d be applying a depreciation of some kind (maybe split equally over 10 years?) to reflect the value today.

The upside of this is that your premium is likely to be lower because your total sum insured is lower. In the event of a claimable incident where the insurer chooses to repair the vehicle, generally the part will be replaced with a new one (although how this is handled depends on your insurer and their claims philosophy).

On the flipside, if the vehicle is deemed a write-off or stolen, with a lower sum insured, you may not be able to fully replicate your vehicle and all its accessories.

WHAT METHOD TO USE?

THIS is a personal decision – for some people with older vehicles in particular, they are prepared to wear more of the risk in return for a lower premium.

Others, sometimes with newer vehicles, are after the certainty that they can fully replace their vehicle like for like. The key is that you understand this dynamic and make the choice that works for you.

HOW DOES THIS APPLY TO MY INSURER?

THIS is a tricky question because, believe it or not, not all insurance products are the same. The key is to get to a place where you feel your total sum insured is fair and reflective of your vehicle. I’d recommend you do the following:

1.Work out the Sum Insured you think is fair for your vehicle considering the mods and accessories you have. Remember to consider whether you prefer a replacement or depreciated amount for the mods/accessories.

2. Speak to your insurer about that value. Find out whether:
a. They’ll cover you to that amount, or what value they are willing to give you and why (some will; some won’t want to cover mods/accessories; and some will have limits).
b. How they’ll treat replacing your mods/accessories in:
i. A repairable accident (are you likely to get new, or do they specify secondhand parts?)
ii. A total loss scenario.

To clarify, at Club 4X4 we are open to covering your mods/accessories for replacement value, or at a depreciated value depending on your preference. As always, if you are unsure about anything, make sure you ask! Better to know now rather than get a surprise at claim time …