Most insurers will also give you the option of market or agreed value in the event that your car is written off.
Before you adjust your seat, turn on the radio and drive away, it’s important to understand some of the finer details of car insurance – particularly how your car is valued should anything happen to it.
So below you will find a quick crash course that will clear up any confusion surrounding two common types of insurance currently available to consumers.
First up is “agreed value”. In the event of a write off, the insurer will pay the dollar amount shown on the policy
To give this a bit of context, here is a quick example:
A vehicle with an agreed value of $30,000 has been written off.
The policy will pay out $30,000.
So what about “market value”?
A market value policy is directly tied to what an assessor thinks a car is worth at the time of the claim. Some of the factors that determine a payout may be the condition of the car, its age, as well as make and model.
So let’s now take our example from last time and apply the same rules in the situation below.
A car with a market value policy has been written off. There’s no fixed agreed value in this case.
After the accident, the insurance company decides the payout amount once they have investigated the current market value of the car.
Both have advantages and disadvantages depending on your financial situation and will have different impacts on the amount that you pay for your car insurance.
Find out more about car insurance and what best suits your needs using our car insurance comparison tool.