Vehicle owners in NSW would be familiar with the car insurance terminology during their hunt for the ideal policy. Though the most generic terms are easily understandable, some terms need a deeper understanding. Knowing the essential terms correctly is vital to getting the right coverage before signing on the dotted line.
Market value and agreed value are two terms you come across when looking for car insurance NSW. Getting an appropriate car insurance quote depends on communicating facts about the car, its history, and your requisites, as much as it does choosing your excess and valuation approach. Make sure you let the insurer know everything he needs to know before they fix your vehicle’s insurance premium.
Now, let us explore the terms so you can make an informed decision.
When you insure your car at the market value, then it implicitly means that if your car is deemed a total write-off after an accident, the claim benefit you will receive is equal to the current market value of your car’s make, model, and series.
While determining the market value, your insurer will consider the worth of similar vehicles and mileage. The insurance provider also considers the average sale price of your car if it were to be replaced that day.
For instance, someone bought a car three years ago for $10000 and at the time of claiming the market prices have hit the $8000 mark. Here, the person seeking vehicle replacement will receive $8000 (minus excesses and other fees; read the product disclosure statements or contact the insurer to know the final amount that will be paid)
Benefit: Market value plans are cheaper compared to the agreed-value based plans if the agreed value is higher than the market value. If you want to save some money on premiums, you could insure your car at market value. Plus, you will get a car replacement under the current market price of your vehicle at the time of a claim (or your insurer will pay you that amount of money).
Drawback: As you already know, the vehicle value depreciates. So, expect a reduced value at the time of your claim. This is the chief reason the agreed value policy is more helpful. You will not undergo many losses while replacing.
This is a mutually agreed-upon figure that finds its place in your policy. The agreed value can be higher or lower than your car’s actual price. You may insure your vehicle for a higher value if your insurer gives his consent. The amount your vehicle is insured for will be reimbursed to you on a successful claim. Get in touch with the car insurance provider to know more about this.
Not all vehicles can be insured for an agreed value. Every insurance company works with a distinct set of terms and conditions. Therefore, when you request a car insurance quote you should talk to the insurer about their offerings, and how much lower/higher they will insure your vehicle than the market prices.
Irrespective of the depreciation, you will receive the promised amount (minus the excess payment and other fees) on a successful claim.
Benefit: You are more confident of what you will receive should you make a claim. Whereas, in market value policies, you wouldn’t know the exact figure as market prices fluctuate.
Drawback: If you go for a higher agreed value, you need to pay a higher insurance premium. While, if you choose an agreed value lower than your car’s worth, you can reduce the premium, but at the time of claim you may not be fully covered. Also, the agreed value may change with each policy renewal. For example, if your car insurance online provider changes their mind, you may not get the same agreed value as the previous year for the coming year.
Explore these options before you end up buying a car insurance plan. It would be best to introspect on how long you plan to use your vehicle, your needs and wants, and your overall vehicle expenses then decide.