Removing salvage retention

Concerns over insurance salvage rights for classic car policyholders
Just imagine your MGV8 is involved in a serious accident and is covered by a classic car policy with an agreed value of £22,000 but with no optional cover to protect you from salvage retention by the insurer and the payout made by the insurer is equal to the agreed value. What is the likely net payout you would receive from the insurer if you decide you want to retain the salvage and use the payout funds to part cover the cost of the restoration works and parts?

Insurer payout is the Agreed Value amount
£22,000
Policyholder buys back the salvage (negotiation) say
£3,500
Net payout received by the policyholder
£18,500

The alternative is to say farewell to the seriously damaged MGV8 you have cherished (as the insurer retains the salvage) and start looking for another MGV8 in the same condition and within your payout amount of £22,000. Whether the payout sum will be sufficient will depend on how up to date your agreed value amount was and how prices may have changed in the period since you last agreed the value with the insurer when you renewed your policy. Clearly it's necessary to regularly review the sufficiency of the agreed vale amount.

NIL Deduction Salvage Retention is a welcome policy addition. More
Updated: 220629

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Posted: 220503
Optional extensions to coverage of a classic car policy
With a classic car insurance policy through the specialist broker Footman James they offer an optional extension to the coverage of the policy which includes a "Nil Deduction Salvage Retention". In the latest renewal of a classic car policy with Footman James the papers with the notice of the renewal premium include confirmation that two optional covers are included - NIL Deduction Salvage Retention and Agreed Value:

The premium additions include Insurance Premium Tax @ 12%. A sheet included with the renewal documents provides summary details of the "compulsory cover you require to drive the vehicle on a public highway but also the optional extensions you can add to the basic cover if you wish".

Although the chance of a write off and full payout may be felt low, for 29p a week the cover seems well worth including.
Concerns over insurance salvage rights for classic car policyholders
In 2012 we reported concerns where specialist classic car insurers had amended their policies regarding policyholders' salvage rights in the event of a total write off but appeared to be using terms that applied to modern vehicle accident conditions. The situation with classic cars is different because, depending on the loss category, many owners of historic vehicles would quite understandably be unhappy to see their cherished vehicle crushed when several of the body panels, interior trim or mechanical components could be salvaged and reused to good and safe advantage. In other cases the costs of repair of major damage may exceed the agreed insurance value so the cars were considered uneconomic repair cases by the insurer and were classed as a Category C. But many classic car owners faced with that situation might prefer to rebuild the damaged car. But with a full payout to the policyholder the insurer retained the salvage rights so if the policyholder wanted to use the payout to restore the car then they had to buy back the salvage from the insurer. That effectively reduced the available funds to pay for the restoration of the car.
Salvage categories