Insurance underinsured after price rise possibility

Hypothetical scenario. Just been looking at my policy for the usual wriggle outs.

It says they’ll pay up to the insured amount to replace as new, via a distributor of their choice or of my choice if they’ll price match. However there seems to be a trap there if the same bike now costs more than you insured it for, which seems quite possible. Seems that you could end up having to take a replacement of a lower spec level. They don’t allow you to make up the difference to get the same model and spec.

Anyone had anything like that happen? Should we be insuring bikes for a bit more than the current full retail?

As far as I understand it the insurance should put you in the position you were in before the loss. That position was owning a used bike.

If I had a 1990 Ford Fiesta and it got nicked, should the insurers be obliged to provide me with a brand new 2024 Fiesta?

I had an orange clockwork insured for £1000. 2 years ago It got stolen and when I’d added up all the bits at the post COVID prices plus the attached stuff – bag, lights, kids shotgun seat, the lock it came out as £1500.

The insurance co accepted this, then took the £400 excess off and I got £1100.I  was happy.

The next year the insurance policy went up £200. I was not happy . Not surprised, but still.

This year the policy is back to what it was before the theft.

I very much suspect it will vary insurance co to insurance co.

As far as I understand it the insurance should put you in the position you were in before the loss. That position was owning a used bike.

This isn’t the question. It’s specifically a new for old policy.

and I got £1100

Yep, wouldn’t be a problem if they just gave out cash. I guess they don’t to avoid fraud.

When I added my bikes to the home insurance, the chap on the phone basically said to insure it to the value that it would cost to replace. So if, for example I’d paid 3k for a bike in the sale which should have been 5k, it gets insured for the full RRP.

Same with upgrades. I’d put new forks on so he said to add the value of purchasing the fork new to the insured value of the bike.

So my theoretical 5k bike to which I’d added a theoretical £1k fork makes the insured value 6k. That’s the replacement cost, even though the actual cost would have been less than that.

The following year at renewal time, I guess you’d need to bump the value up a bit to compensate for the ever increasing prices/ decreasing spec of newer bikes.

If you had a trail bike with XT and 36s, you’d need to see what the same spec trail bike would cost and insure your bike to that value. If you don’t, you’d probably end up out of pocket if it was stolen.

insure it to the value that it would cost to replace

That’s the thing, cost to replace not today but at some unknown point during the year.

It’s not a “trap” but something that’s been in insurance policies as long as I can remember & known as the Average Clause – it’s to avoid people deliberately under-insuring to reduce costs.

I’ve only ever had one issue with it & they agreed with me after a short discussion – I argued that the value was correct when I declared it at the start of the policy but the cost had risen during the year due to new models in the range.  They’ll take that if it’s within the 12 months but beyond that you would need to update values each renewal or be able to convince them that you had acted/declared values in good faith.

A fair few (especially the big names) index-link everything now to try & avoid this due to high inflation levels in recent years.

You do update your sums insured every year at renewal when they ask you to check your cover is adequate?

All in all a bit of a minefield.

like if I had a bike with X01 drivetrain, but it was old cable eagle, or 11 speed or even 10 speed…

Is a new for old equivalent X01 transmissionAXS?

as in, would I look on the manufacturers website, find a bike with that drivetrain, plus the same level of suspension etc; and put that as the value?

You do update your sums insured every year at renewal when they ask you to check your cover is adequate?

Yes. This is about within the same year, as I mentioned earlier.

as in, would I look on the manufacturers website, find a bike with that drivetrain, plus the same level of suspension etc; and put that as the value?

Maybe it’d be for the same named spec for the whole bike e.g. Comp or Expert.