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Should I Choose Agreed Value or Market Value Car Insurance?

Getting your car finance sorted and picking a vehicle is one thing, but once it is time to take to the road you need to have insurance for your car. With each insurer offering a wide variety of coverage, it pays to examine the fine print carefully to make sure you are covered for what you need. From the excess, to no claim bonuses, car hire, after-accident care, and many other factors – pause and consider.

But one matter where you might have some doubt creep in relates to the valuation of your car, which among other things not only dictates the premium you pay for your insurance, but how much you are covered for in the event of a write-off. You will typically have the choice between an agreed value, or a market value. Which one should you choose?


Agreed value car insurance

When you choose agreed value car insurance you will need to come to a direct agreement with the insurer as to the value of your individual car. As it is a key term within the policy, this will take place when you first sign the contract.

For the most part, agreed value car insurance is beneficial when your car has particular modifications, enhancements or is unique in some particular way. For example, if you have fitted the car with performance upgrades, or additional amenities that are not stock, an agreed value should reflect a higher valuation on account of including these features.


Market value car insurance

Unlike agreed value car insurance, market value does not involve a direct negotiation or discussion as to the car’s valuation. It is decided solely by the insurer based on the prevailing market price for the same car in its current condition. Some people assume that this translates to the vehicle’s second hand price, however that’s not exactly the case because that in itself is a negotiation process.

As a general rule of thumb, market value car insurance is more likely to be affordable than if the policy were undertaken with an agreed value. Whereas agree value is useful for unique cars, market value is best suited for regular cars, particularly older vehicles in average condition.


Questions you should ask yourself

To help you decide which option is best for you, ask yourself these questions:

  • Is my car brand new, second hand or a collector car?
  • Have I spent money modifying the car and do I need coverage for the value of these variations?
  • What condition is the car currently in?
  • Do I believe the insurer’s valuation is fair and reasonable? How does it compare with others?
  • How long do I plan to own this vehicle?
  • What is my budget for my car insurance premium?


Once you’ve walked through these considerations, you should know which option suits you best.

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