Soaring car prices ‘insures’ problems
THE rocketing value of second-hand car values could leave motorists underinsured — and thousands out of pocket — if their vehicle is stolen or destroyed.
The sharp increase in used vehicle prices, some by more than 50 per cent of their 2019 worth, has been triggered by new car supply shortages, international travel bans and a reluctance to use public transport in a Covid-19 climate.
Data compiled by Carsales.com.au showed the median price of a Ford Ranger ute climbed by 34.3 per cent compared with pre-pandemic prices. Popular vehicles such as the Toyota LandCruiser (56.9 per cent), Mazda3 (38.5 per cent), VW Golf (29.2 per cent) and Toyota Corolla (20.5 per cent) also rose dramatically.
And the spike in prices means many drivers now have insurance policies that may not cover a gap between what their car is insured for, and its real-world replacement cost.
Annabelle Vo, a spokeswoman for the giant IAG group that includes NRMA Insurance, said the coronavirus pandemic and subsequent supply challenges led to an increase in used car demand, pushing prices up.
“We’ve been aware of this and the challenge it can present for customers in terms of the market value of their vehicle should they unfortunately suffer a total loss of their vehicle in an accident,” she said.
“We have been adjusting our processes to ease these issues and adjust agreed values or sum insured in-line with market trends.”
Sydney publicist Rachel Demarco received less money than expected when her car was written off this year.
The replacement vehicle is now insured for a sum that reflects its replacement cost.
“We bought the car secondhand from a family member and got a good deal,” she said. “It’s worth a lot more than we paid. But the car is insured for its current market value.”