South West insurer Cornish Mutual has revealed that an increasing number of agricultural vehicles are being inadvertently undervalued. The company says it is very easy for farmers to lose track of the true replacement value of tractors and other farm vehicles over time, particularly because the second hand market is currently very strong.
Graham Nicholls, Technical Leader at Cornish Mutual, said: “In line with the general insurance market, Cornish Mutual calculates the premium for agricultural vehicles based on the declared value provided by the policyholder. This should represent the cost to replace the insured vehicle with one of the same make, model, specification, age and condition.
“In the unfortunate event of a vehicle being written off, the claim settlement will be the declared value or the market value whichever is less.
“We are seeing an increasing number of claims where the declared value has been significantly below the actual market value which then results in a financial shortfall that may make it difficult to replace the damaged vehicle.
“While historically agricultural vehicle values have depreciated year on year, the second hand market for many agricultural vehicles appears to be very buoyant on the back of a strong export market.
“In addition, the market value will be increased by attachments such as fore-end loaders and the installation of permanent communications or navigational equipment. These attachments and accessories should not be overlooked when setting a declared value.”
Cornish Mutual is therefore strongly recommending that farmers review their vehicle values on an annual basis, seeking advice from an agricultural vehicle trader where necessary.