You never want to say goodbye to your car, but what if the worst were to happen and it was damaged to the point of no return? When you took out your car insurance policy did you choose market value or agreed value? Do you know what your comprehensive car insurance payout would be?
Having your car insured isn’t just the best way to protect it in tricky situations, it is also the safety net that will help get you back on the road in no time. It’s a win-win! This sounds pretty simple until your insurer talks about “market value” and “agreed value”. Check out our blog below to learn more about these common insurance terms.
What Is Market Value?
Your car insurance market value refers to the amount your car would be worth on the open market if it were purchased as a used car today. If your car needed to be replaced, it would be matched ‘like for like’ based on the following criteria:
- Overall condition
What Is Agreed Value?
Now that you understand market value, let’s talk about its alternative. The agreed value is the amount you agree to have your car insured for, which your insurer will cover you for throughout the duration of your policy.
Most insurers will offer an agreed value range for you to select from, so you’re in control. In deciding on your agreed value note that the higher the dollar amount, the higher your premium will become.
Does My Agreed Value Change?
The short answer is ‘Yes’. Each year you renew your policy the market value of your car may change slightly, which means the maximum amount you can agree to might change.
While the value of your car may reduce year-to-year, you can regain some value (in a manner of speaking) from the savings you receive from a reduced premium.
Over to You
Which have you decided to go with and why? Market value or agreed value? Let us know in the comments below.