Checking motorhome warranty insurance residual valuations

Checking motorhome warranty insurance residual valuations. We asked some questions on valuations from Martyn Raybold at the Engineer aftercare warranty company. We focused on the topics of motorhome insurance, motorhome valuations, and looking at pre and post-Corona virus. Many of you know Martyn’s background is in insurance so there are many crossovers between collectable cars and motorhomes. At this moment in time, there are new challenges in understanding the residual values of used motorhomes and campervans. Looking at normal risks of valuations at this moment in time currently, there is an opportunity for an underwriter to make hay, but bubbles don’t last long and once manufacturing cranks up we all expect the values will re-adjust. The leading question is when will we see a normal market?

There are some very interesting points raised by Martyn and we also asked for an opinion from Shane Malpass from “we buy any motorcaravan” one of the leading cash buyers in the UK. There is no doubt a shortage of used motorhomes has made prices go one way and that is up and up again. All agree that rising prices look unstoppable at the moment and that will have consequences not seen before. If you are running a motorhome or campervan dealership then as the saying goes “you cannot sell off an empty barrow”! Taking orders is one thing but providing delivery dates for collection is very difficult at this time. There have been many reasons for supply chain pressures and inventory not moving also there is the situation of supply of labour there are not enough people to go around. All have created issues with rising prices and residual values adding too many complications.

Pre-Coronavirus Motorhome Camper valuations

Pre-covid and the values of pre-owned campervans and motorhomes historically have been monitored by specialist editors from ‘Glass’s’ using the regularly published ‘Glass’s Guides’ by group, so car, vans, motorhome-camper, motorcycle, and caravan. Then, manufacturers, dealerships, and insurance companies refer to these guides to assess the value of a specific vehicle. *Motor vehicle books are published monthly and Caravans quarterly. The problem for the guides has been the rise in prices has not been captured by the guides. As one dealer got asked by a customer “where are all of the used £40K motorhomes”? Simples the dealer’s reply was that they are now £50K motorhomes. With new prices rising and many unconfirmed order dates stuck in the process, this is making it harder to get accurate residual values. When looking to finance any leisure vehicle and with rising values affecting all sorts of scenarios it comes down to who will underwrite residuals accurately?

Post-Coronavirus

Coronavirus has as we know impacted heavily on a manufacturer’s ability to build new vehicles, as with no new vehicles coming to the market, pre-owned ones have increased in value. To the point that some late model well-maintained vehicles can retail for almost the same price as a new one would have in 2019-20. It is a seller’s market as they say. Many leading retailers have turned to a different approach of selling just into motorhome auctions and letting the trade decide what they are worth. Companies like CMS trade auctions are making huge gains in attracting trade buyers who simply cannot find enough motorhomes or campervans to sell. Placed online with full videos and information for trade only are really helping savvy buyers to find the stock.

Insurance value against ‘market value’

Insurance companies use Glass’s guide to assess the value of a vehicle in the event of accident write-off or theft, with market values now rising substantially will your insurer pay the new market rate when the unthinkable happens? Or, will they pay a far lesser sum than it will cost to replace your vehicle? Having Gap insurance has been a good idea in the past the issue now is that most vehicles have risen in value and like-for-like replacement has become a huge issue. No doubt many will have good equity to avoid claims but accurate valuations are getting harder to find to compare.

‘Stated value’ (The value you the customer specify as you see it at the time you buy your insurance) against ‘Actual Value’ (The value the Insurance company will actually payout in the event of a claim.  In reality, these are rarely the same. This means there is an element of risk that an owner will not be in a position to buy a like-for-like vehicle in the event of its loss. In the ‘Classic & Collectible Car’ world, owners can opt for an ‘Agreed value, this is where a Vintage or Classic car will have a higher value than the same vehicle not properly maintained and used daily.  It is not possible to specify an ‘Agreed Value’ on an everyday modern vehicle.

The good news

The good news for owners is that values will be higher for a while, so late-model and well-maintained vehicles are and will continue to be desirable and if something is desirable, people will pay more!  Glass’s guides are updated regularly as above, using the market conditions at the time.  So the Editors providing values will take into account the current trends in higher values and include this in their calculations.  This bubble will also like all before it will burst when manufacturers again crank up production and the market re-balances.

Another solution may be to buy ‘Gap Insurance’.  This is a top-up cover to your road insurance to help offset the difference in what the insurer will pay to what the market requires you to buy a like-for-like vehicle.  Be careful though when buying ‘Gap’ insurance, it is easy to buy insurance that is almost impossible to draw on, so read the small print and ask the broker-insurer some very specific questions on what is covered. There are many other posts on the Engineer Aftercare News page for owners to read on a wide range of caravan, campervan and motorhome topics.