Why Sentiment Can’t Be Insured: The Practical Role of Advice 

Christelle Colman, CEO and founder of Ami Underwriting Managers  

In the insurance world, one of the greatest challenges advisers faces is bridging the gap between client expectations and the realities of policy coverage.  

Insurance, at its core, is about indemnity— restoring financial position after a loss—not covering sentimental value. To manage this effectively, brokers must ensure clients understand their policy choices, particularly when it comes to retail, agreed, and guaranteed values.  

“A well-informed client is less likely to be disappointed during a claim.” 

The Case for Clear Advice  

Consider a recent claim for a 2006 convertible insured on a retail value basis. While the insurer’s valuation, derived from TransUnion data, indicated a retail value of R260,000, the insured rejected this offer, believing the vehicle to be worth upwards of R450,000. To ensure fairness, the insurer commissioned an independent specialist for an in-person post-loss valuation, which confirmed a value of R340,000—still far beyond the policy’s ambit but also rejected by the insured.  

The insured’s expectations were based on sentimental attachment and post-loss desktop research comparing vehicles of different models and years. Despite the insurer’s efforts, the difference in perceived value and emotional expectations led to a contentious claims process.  

This example, while modified for anonymity, highlights the critical role of brokers. A broker’s ability to explain the implications of retail, agreed, and guaranteed value at the outset can prevent disputes and help clients align their coverage with their needs and expectations.  

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OSTI Insights on Retail Value  

The Ombudsman for Short-Term Insurance (OSTI) frequently addresses disputes over retail value. In a notable case, the OSTI explained:  

“Retail value is determined using tools such as the TransUnion Auto Dealer’s Guide, which reflects the amount a vehicle can be purchased for from a dealer, based on its condition and mileage. It does not include customization or perceived sentimental worth unless explicitly agreed upon in the policy terms.”  

This underscores the importance of brokers clearly communicating the basis of cover and clients ensuring they fully understand their policy terms. By aligning client expectations with the realities of insurance, brokers can help prevent surprises at claim stage.  

Retail, Agreed, and Guaranteed Value: What’s the Difference?  

• Retail value is the amount for which a vehicle can generally be purchased from a dealer, based on its age, mileage, and condition. It’s calculated using industry-recognized tools such as the TransUnion Auto Dealer’s Guide. Retail value works well for standard vehicles where market data is readily available, but it does not consider customizations or sentimental value. 

• Agreed value is a predetermined amount agreed upon between the insurer and the client at policy inception. This type of cover requires a detailed valuation, typically for unique or high- value assets, and ensures a specific payout regardless of market fluctuations. 

• Guaranteed value ensures a fixed payout for the replacement of an item, often without depreciation. It is common for newer items but comes at a higher premium due to its certainty.  

“Brokers must not only understand the products they sell but also anticipate and address the emotional factors that influence client perceptions.” 

Advisers as Educators  

“A well-informed client is less likely to be disappointed during a claim,” says Christelle Colman, CEO of Ami Underwriting Managers. Brokers must not only understand the products they sell but also anticipate and address the emotional factors that influence client perceptions. This includes:  

• Explaining policy choices: Walking clients through the differences between retail, agreed, and guaranteed values.  

• Setting realistic expectations: Emphasizing that insurance covers financial loss, not sentimental value.  

• Encouraging proper documentation: Advising clients to secure upfront valuations for unique or customized items.  

The Way Forward  

Insurance advice has evolved beyond matching clients to products. It now encompasses education, emotional intelligence, and proactive communication. Brokers who excel in this environment do more than manage risk—they build trust by helping clients understand the value and limitations of their coverage.  

The future of insurance advice lies in empowering clients to make informed decisions. By bridging the gap between technical knowledge and emotional understanding, brokers can turn potential conflicts into opportunities to deepen client relationships and demonstrate the true value of their expertise.