Understanding agreed value and market value car insurance
Tips for understanding agreed and market values from our car insurance expert, Adrian Taylor
Adrian Taylor
Executive General Manager – General Insurance
Weigh up your options
If you’re looking for the peace of mind that comes with knowing how much you could receive from an insurer in the event of a write off, agreed value could be for you. However, not all insurers offer agreed value and those that don’t will simply apply market value at the time of the claim. If you have any doubts, you should contact your insurer or read your PDS.
Compare like-for-like policies
When shopping for a new car insurance policy, make sure you’re comparing apples to apples. If you’re on an agreed or market value policy currently, make sure the policies you’re comparing use the same valuation method as well as the same excess, optional covers and payment frequency.
Contact your insurer around renewal time
If you have an agreed value policy, the amount may change when your policy renews. Your insurer will provide this information in your renewal notice. Make sure you contact them if you need to negotiate a different agreed value.
What is market value car insurance?
Market value car insurance is a policy in which your provider uses information about your vehicle (e.g. make, model, age, condition) to calculate its value in the current market if you were to make a claim. This value is typically determined and paid out in the event your car is written off (also known as a total loss).
How do insurers determine the market value of a car?
Your insurance provider may calculate the market value of your car by looking at the price of same or similar cars on the open market. Insurers may also gather information from industry publications and other data sources to help set the market value of your car.
Your car’s market value typically won’t take into account registration and Compulsory Third Party insurance costs, stamp duty, warranties and dealership charges.
Is market value the same as trade-in value?
Market value is not the same as trade-in value. Market values are based on what similar cars are selling for on the market (both new and used cars) and is how much the insurer will pay you at claim time if your car is written off. Trade-in values are determined by car dealerships when you bring in your current vehicle and plan on purchasing a new one.
What is agreed value car insurance?
Agreed value car insurance is a policy which insures your car for a set value. This allows you to know exactly what the payout will be when your claim is accepted and your car is determined as a total loss (or written off).
The agreed value of your policy will be listed in your Certificate of Insurance (COI).
Does an agreed value policy depreciate?
No – the agreed value of your policy won’t depreciate with the value of your vehicle. It will stay the same until you renew your car insurance.
What happens to agreed value car insurance at renewal time?
When your car insurance renews each year, your insurer may revise your agreed value amount and potentially lower it. However, you could negotiate a different agreed value by contacting your insurance provider once you receive your renewal notice.
Market value vs agreed value car insurance
The main difference between agreed value and market value is how your insurer covers your car in the event of a total loss.
Agreed value policies pay out a set amount when your car is written off, whereas the amount you’ll be paid through your market value policy depends on the current market value of your car, and will be determined when you claim.
Another key difference is that agreed value car insurance is not available on every policy; it’s typically only offered through comprehensive car insurance.
Is it better to insure my car for market value or agreed value?
It depends on your situation. If you have a car loan or a brand-new car, an agreed value comprehensive car insurance policy might suit you better.
Taking out an agreed value policy could help protect you against the financial impact of depreciation. It may also help you pay off your loan should the car be deemed a total loss after an incident.
Conversely, if your car is paid off and you’ve had it for several years, you may prefer a market value car insurance policy since they generally have lower premiums.
Can I choose agreed value or market value with third party car insurance?
Having an agreed value policy is generally an option reserved for comprehensive car insurance, since third party policies only cover your vehicle in specific circumstances. Third Party Fire and Theft car insurance typically only covers your vehicle if it’s stolen or catches fire, while Third Party Property Damage may only cover your car in very limited instances.
Make sure you read the relevant Product Disclosure Statement (PDS) to understand the policy terms, features and exclusions. Also read the Target Market Determination (TMD) to ensure the policy is right for you.
Meet our car insurance expert, Adrian Taylor
As a General Insurance expert with over 13 years’ experience in financial services, Adrian Taylor is passionate about demystifying car insurance for consumers, so they have a better understanding of what they’re covered for. Adrian’s goal is to make more information available from more insurers, to make it easier to compare and save.