Deciding whether agreed value or market value car insurance is the better choice for you depends on your situation. You may find that if you have a car loan or a brand-new car an agreed value comprehensive car insurance policy could be a suitable option for you.
This is because brand new cars depreciate in value very quickly, so taking out car insurance with an agreed value can help protect you against the financial impact of depreciation should you need a payout after a write-off. Similarly, if you have a car loan, an agreed value policy may help you pay off the loan should the car be deemed a total loss after an incident.
On the other hand, if your car is all paid off and you’ve had it for a number of years, you may decide that market value car insurance is best because it’s more affordable and you don’t need any of the advantages of agreed value car insurance.
When your insurance renewal rolls around each year, you might find your insurer lowers your agreed value amount. You may be able to negotiate a different agreed value each time by contacting your insurance provider once you receive your renewal notice.
It’s extremely rare to find agreed value car insurance options on Third Party Property Damage (TPPD) or Third Party Fire and Theft (TPFT) policies, but not impossible. Generally speaking, it’s only an option reserved for comprehensive, the highest type of car insurance cover.
This is because TPPD policies don’t normally cover damage to your vehicle (except in specific circumstances), so there is little need to determine the value your car will be insured for. It’s easier to find agreed value TPFT car insurance as this level of cover insures you against certain events that damage your car, but it’s still uncommon.
Furthermore, Compulsory Third Party (CTP) car insurance only covers the costs and liabilities you have for any injuries you cause to other people. It doesn’t cover any costs related to servicing or writing off your car so market value or agreed value insurance for your car is not a relevant consideration and won’t be a part of CTP insurance.
Market value is not the same as trade-in value. Trade-in values are determined by car dealerships when you bring in a current vehicle and plan on purchasing a new one, whereas market values are based on what cars like yours are selling for on the market (both first- and second-hand).