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What is the Replacement Value of My Car for Total Loss?

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If you’re wondering “what is the replacement value of my car” – the good news is it’s largely up to you, as long as you’re insured. You select a car replacement value option when you purchase a comprehensive car insurance policy.

If, however, you’ve written off your car without an insurance policy that’s bad news. You’ll be up for allllll the cost in replacing your vehicle. Unless there was a third party involved and they were at fault, and you got their details and their insurer agrees they were at fault etc etc.

So the ideal scenario is that you’re reading this because you’re shopping around for the best policy. And by best policy, we mean easy to use, easy on your pocket, and provides great cover.

Well, look no further. In this article we’ll explain the following in under 5 minutes:

  • Calculating car replacement value
  • What makes a car a write-off
  • Choosing your insurance provider

Calculating replacement value of my car

Like most things, the more you put in the more you get out. More specifically, the amount you pay for your monthly or annual premium reflects what you’ll be able to get in case of a write-off. You

When you take out a comprehensive car insurance policy, depending on your insurer you may be offered two options around car replacement value:

  1. Market value
  2. Agreed value

One of these options cost a bit more and the other less. An important factor in your selection is having a good understanding of what a write-off (or total loss) is. Because it might not necessarily be what you expect. But, we’ll get to that a little further down…

An insured client asks "What is the replacement value of my car?"

Market value and agreed value

First, here’s what these replacement value options mean:

1. Market value

Your car’s market value is the amount you’d be likely to get for your used car on the open market. If a claim results in a write-off, your insurance provider will assess the market value (if they offer this/this is the option you’ve chosen).

Market value is assessed on several factors. For example, make, model, series, service history, mileage and overall condition as well as claims history.
It’s the job of the motor vehicle assessor at the time of the claim to utilise any market appraisal tools they need to make an informed decision

2. Agreed Value

Agreed value can be any amount you choose when taking out your policy. Provided it’s not unreasonable and your insurance provider agrees to it that is. For argument’s sake, you may decide to set the agreed value higher or lower than your car’s actual value.

The good thing is you know the amount you’ll be paid if your car is ever written off. For the period of that policy, the amount is set in stone. Of course, choosing a lower agreed value reduces your premium. Likewise, choosing a higher agreed value means a higher premium.

Note

There are some costs you may incur prior to settlement. These include possible excesses, remaining premiums, registration, compulsory third-party insurance and damages you’ve previously claimed for but have not completed.

Also

Your insurance provider may have an additional option if your car is really new.

With PD Insurance for example, if your vehicle is deemed a ‘total loss’ because of damage or theft within the first 12 months of its original new car registration, we’ll ask you if you want to replace the vehicle with a new one or would like to be paid out.

Read more about the difference between market value and agreed value.

What else do I need to know about car insurance write-off replacement value?

Every time you renew your policy, your replacement value is re-evaluated, so it might not stay the same. Keep your channels of communication with your insurance provider open and discuss your options and needs.

In some cases, your provider will cover additional costs together with the replacement of your car. Some examples of costs include delivery fee, compulsory third-party insurance and your first 12 month’s registration.

We’ve written these articles to help with decisions around your car insurance options:

The replacement value of my car matters in case of a car write-off like this

What makes a car a write-off?

Hearing the phrase ‘write-off’ may evoke a mental picture of a horribly mangled car to the point of no return, but that’s not always the case.

Before a claim can result in a write-off, your insurance provider gets a detailed assessment to evaluate the situation. Sometimes the car may be unrepairable but sometimes the insurer may deem the car too unsafe or uneconomical to repair. By this we mean vehicle may be assessed as a total loss because the cost to repair it is higher than it would be to replace or to pay out the customer.

A vehicle may also be considered to be a total loss when it’s stolen and isn’t recovered within the required timeframe set out in your policy (usually 21 days).

Always familiarise yourself with your product disclosure statements so you know what applies to your policy.

Comprehensive car insurance write-off replacement value

When you choose comprehensive car insurance, you’re choosing the most wide-ranging insurance cover for the best value. At PD Insurance we’re happy to take any questions about car replacement value. That goes for whether you’re taking out a policy for the first time or renewing.

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