QLD Can I Request a Home Insurance Premium Reduction?

[Oneman]

Hi Clancy.

The way I understand an 'Agreed Value Contract' is that you insure the vehicle, property, whatever for an 'Agreed Value' as opposed to 'Market Value'. Now, if a have a Holden Commodore that has a second hand sale value on the market of $10,000, but mine is a bit of a bomb and I think it's only worth $4,000 then I can insure it for $4,000 at Agreed Value. Saves me paying a premium for $10,000 plus I think it would be dishonest to insure a car worth $4,000 for $10,000 don't you think? With the house it's a similar idea.

Sure, my big house is worth a couple of hundred thousand dollars more to rebuild than the value of a rebuild I'm covering with the reduced premium, but I don't want a huge house anymore if this one burns down or falls over. I pay a reduced premium, enough to cover the rebuild of a smaller house, which is all I want. I'm happy, the insurance company doesn't have to pay out a much larger settlement price on my claim, so their payout is less, so they're happy. Everyone's happy.

This is, more or less, the answer the insurance companies I spoke with gave me. But there is a far more straight forward ending to my personal story. Cheers!

PS. I agree with your comment about purchasing a $1,000 car after paying a $30,000 premium and allowing the insurance company to pocket the $29,000 payout balance. But there aren't too many mugs around like that. Are there?

 

[Clancy]

Hi Clancy. The way I understand an 'Agreed Value Contract' is that you insure the vehicle, property, whatever for an 'Agreed Value' as opposed to 'Market Value'. Now, if a have a Holden Commodore that has a second hand sale value on the market of $10,000 but mine is a bit of a bomb and I think it's only worth $4,000 then I can insure it for $4,000 at Agreed Value. Saves me paying a premium for $10,000 plus I think it would be dishonest to insure a car worth $4,000 for $10,000 don't you think? With the house it's a similar idea. Sure, my BIG house is worth a couple of hundred thousand dollars more to rebuild than the value of a rebuild I'm covering with the reduced premium, BUT, I don't want a huge house anymore if this one burns down or falls over. I pay a reduced premium, enough to cover the rebuild of a smaller house, which is all I want. I'm happy, the insurance company doesn't have to pay out a much larger settlement price on my claim, so their payout is less, so they're happy. Everyone's happy. This is, more or less, the answer the insurance companies I spoke with gave me. But there is a far more straight forward ending to my personal story. Cheers!!
PS. I agree with your comment about purchasing a $1,000 car after paying a $30,000 premium and allowing the insurance company to pocket the $29,000 payout balance. But there aren't too many mugs around like that. Are there?

Ok, but I don't think it is dishonest to insure a car that is worth 4 thousand for ten thousand at all...

The insurance companies have their own market values they work off and they decide for themselves to what degree they are willing to be flexible when they come to an agreed value with you. Ultimately, the car is irrelevant - you are 'paying' for and purchasing the insurance value of 10 thousand.

 

[Oneman]

Years ago, insurance companies were far stricter about who they would cover and for how much. I am in no way associated with any insurance company but from memory over insuring and then making a claim was considered as fraud. No doubt you are correct, things have changed and that is probably why Australia and almost everyone who lives in it is in so much debt.

Having said that though, I disagree with your comment that "I don't think it is dishonest to insure a car that is worth 4 thousand for ten thousand at all". That is morally wrong, in my humble opinion, but then that's another reason why Australia is spiraling nose first into a bottomless pit of doom. I'm not really a moralist Clancy I just disagree with your comment.

 

[Clancy]

Years ago insurance companies were far stricter about who they would cover and for how much. I am in no way associated with any insurance company but from memory over insuring and then making a claim was considered as fraud. No doubt you are correct, things have changed and that is probably why Australia and almost everyone who lives in it is in so much debt. Having said that though, I disagree with your comment that "I don't think it is dishonest to insure a car that is worth 4 thousand for ten thousand at all". That is morally wrong, in my humble opinion, but then that's another reason why Australia is spiraling nose first into a bottomless pit of doom. I'm not really a moralist Clancy I just disagree with your comment.

I don't see your point at all? Are you trying to talk about insurance fraud? Ok, if the person deliberately disposed of the 4 thousand dollar car insured for ten thousand, well of course that is wrong...but if the car was destroyed for reasons beyond the owners control, then I don't see how it is wrong to claim 10 thousand back if that is the amount he was paying the premium for. See, this is why the car is irrelevant, it is the insured amount that you pay for, and get insurance payout for.

 

[Oneman]

It is wrong because the owner of the car over insured the car in the first place in case it was damaged/destroyed. Insurance isn't a profit making exercise. So, in your way of thinking it would have been even more profitable for the owner to insure the car for $20,000 and make a really good profit from the demise of his vehicle.

I really don't think you understand the point of insurance at all. It IS about the property insured. I'll reiterate, if you are expecting to 'gain financially' from an untoward incident then that is not what insurance is about, and in my opinion that is fraudulent. Insurance is there to cover your loss, not to enable you to profit from it. I think we'll just have to agree to disagree as I think this discussion is simply becoming an argument and I didn't get onto this forum to argue with anybody. Cheers!

 

[Clancy]

It is wrong because the owner of the car over insured the car in the first place in case it was damaged/destroyed. Insurance isn't a profit making exercise. So, in your way of thinking it would have been even more profitable for the owner to insure the car for $20,000 and make a really good profit from the demise of his vehicle.

I really don't think you understand the point of insurance at all. It IS about the property insured. I'll reiterate, if you are expecting to 'gain financially' from an untoward incident then that is not what insurance is about, and in my opinion that is fraudulent. Insurance is there to cover your loss, not to enable you to profit from it. I think we'll just have to agree to disagree as I think this discussion is simply becoming an argument and I didn't get onto this forum to argue with anybody. Cheers!

Ok, if what you say is correct, then explain how insurance companies *specifically* offer 'new for old' conditions in their policies? (My house is full of old crap, if i had a fire i would benefit way more than 10 grand)