Reinstatement cover when agreed value cover isn't enough

Hiscox - specialist vehicle insurance from people who share your passion
RH Specialist Insurance, a Hiscox company, has provided specialist, classic and vintage car insurance for over 40 years and are a leading arranger of specialist and classic car insurance.

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Posted: 191016
When market or agreed value cover simply isn't available, RH offers the solution - reinstatement cover
A recent promotion advertisement released by Hiscox is likely to be of interest to many classic car owners who recognise the amount of cover provided by an agreed value insurance policy can be far less than the real costs of reinstating a classic car should it suffer serious damage. Hiscox explain the differences between market value or replacement value, usually called agreed value cover and reinstatement cover.
Replacement value and reinstatement value explained
Hiscox says the reinstatement value is higher and represents the amount the policyholder has spent on the vehicle as evidenced by receipts. The replacement value, the lower of the values and what insurers usually call the "agreed value", is the cost of replacing the vehicle with a like-for-like make and model.

What if the worst happens?
If a policyholder has to make a claim, the higher reinstatement value would be offered to cover the cost of the work, providing the vehicle is repairable within DVLA guidelines. The lower agreed value amount would apply if the vehicle has been stolen and not recovered, or if the damage isn't repairable within DVLA guidelines.

Hiscox Motor Insurance - Policy wording
On page 11 of their policy wording document with their policy definitions, Hiscox have:
"How much we will pay - reinstatement value - if the basis of settlement shown on schedule is ‘reinstatement value’, we will pay you the higher of the insured vehicle’s market value or the amount insured." More

On the Hiscox website two interesting matters are mentioned:

> Cherished salvage - unlike other insurers, free and automatic return of scrappage on all vehicles over 20 years old.
> Rallies cover - automatic cover included for club rallies.
The inclusion of these two benefits will be seen as a useful feature of a classic car insurance policy.

The information set out in the promotion advertisement released by Hiscox is certainly interesting because many fellow MGV8 enthusiasts have been concerned for many years that, should they have to make a claim where their car has suffered major damage, there tends to be a yawning gap between the agreed value payout and the cost of their opting to use that payout to reinstate their car. In addition there have been very serious concerns over the risk of their losing the scrappage following a full insurance claim payout and then having to negotiate to buy it back from the insurer should the owner wish to go ahead with a rebuild to reinstate the car to its former condition.

Further checks over Hiscox's reinstatement cover will need to be made in order to fully understand what on the face of it would be a welcome improvement to their classic car insurance cover. The likelihood is reinstatement cover will see a higher premium so an owner will need to assess the risks of an insufficient payout from an agreed value policy should there be a major claim for damage, and also the linked value for money assessment.

The need for good quality maintenance records is clear - if you do opt for reinstatement insurance cover you will need to search out all evidence of earlier expenses paid to refurbish or restore the car and then evidence of the both the earlier maintenance of your classic car and the records of subsequent maintenance expenses It will be interesting to see whether Hiscox would accept a professional reinstatement valuation of a classic car as the basis for determining the amount of reinstatement insurance cover. In effect a statement of the condition of a car inspected by a professional vehicle inspector or specialist is accepted by the insurer as the evidence supporting both the condition of the car and the reinstatement value, rather than a policyholder on making a claim under a reinstatement provision in the cover in their policy then having to prove it by producing armfuls of invoices and other evidence of what had been spent on the car, Clearly if the car has undergone a major restoration at a recent time the vehicle owner commissioning that work, or a subsequent owner, could produce the restoration invoice and related documentation which will set out, usually in some detail, all the work and replacement parts used during the restoration. If a classic car in good, original condition and well maintained over the years has only the maintenance documentation, including any occasional professional refurbishments, the owner will probably find it difficult to produce documentary evidence to support a reinstatement value. Some clarification over these matters will be needed to fully understand the scope of the cover and how it works. But news of the availability of reinstatement cover will be welcomed by many MGV8 enthusiasts.