Agreed Value vs Market Value Car Insurance – What’s the difference?
So, you’ve purchased a new car and you need to insure it with car insurance. It’s that simple, right? Not necessarily.
When it comes to car insurance there are different options and types of policies to consider and it’s not just about the price.
We’re here to help you understand car insurance a little better and today, we’re starting with agreed value vs market value – What’s the difference? Let’s find out.
What is agreed value car insurance?
A sum that has been fixed upon a discussion and agreement between you and your insurer when taking out your policy, is Agreed Value car insurance.
These policies are usually more expensive. Why? Because often, once the car begins to decrease in value, the agreed value becomes higher than what the car would actually sell for on the market.
What is market value car insurance?
This brings us to the market value option.
Market value car insurance is the industry term for what your card would sell for on the market.
In this scenario, if your car was written off following a car accident, the amount you receive from your insurer, will be the same amount as which they estimate your car was worth just before the accident.
Market value policy premiums are usually cheaper for this reason.
How do you know which option is right for you?
Deciding which option is right for you can be tricky, and it all comes down to your individual circumstances.
Some points to consider:
- Certainty and peace of mind is provided
- There is flexibility around the insured amount
- Higher premiums
- A level of uncertainty about what compensation you will receive
- No flexibility around the insured amount
- Lower premiums
Need help deciding whether agreed value or market value car insurance is right for you?
At Grace Insurance in Perth, we can help. Contact us today to find out how.