Home Car Insurance Advice Should you insure your car for market value?

Should you insure your car for market value?

by jonckie@arrivealive.co.za

A lot of insurance companies will give you the opportunity to insure your car for 1 of 3 different values. These 3 options include the market value, the trade value, and the retail value. The most common of these is market and retail value.

Arguably, the retail value is the best option because it’s the average amount that a dealer would sell your car for if it’s stolen or written off in an accident. And this amount is usually higher than the others and results in a value that you could likely sell your car for if you were to do it privately.

Generally, you’ll be told about each value (very briefly) before you have to speedily make a decision so that you can get your quote completed. In our opinion, knowing what the words mean isn’t as helpful as being given some straight talk. Which is what we’ll do here. We’re going to unpack what market value means and then tell you if we think it’s a good value to choose.

What ‘market value’ means

The market value of a car factors in your car’s mileage, overall condition, service history, and accident reports. Things like that. These details help determine the value of your car.

Basically, if you were going to sell your car privately, then the market value would be the price that you could get for it. Or to put it another way, it’s the price a buyer is willing to pay a seller for a car.

Weighing up the pros and cons

The biggest point that we need to make is that the market value is lower than the retail value. This means that your car insurance premium will be less. The reason why, is because market value uses the retail value as a basis and then factors in the kilometre reading, the condition of the car, and all that jazz. These details usually reduce the retail value, which is why you’ll get less for your car if it’s written off or stolen.

Before you rush to the retail value option, just know that this isn’t a way to get rich after an incident happens. It’s just a way to get you back to the same financial position you were in before. And this isn’t generally something that you can do if you insure your car for its market value.

This is when you might want to consider retail over market value. That’s right. Our big reveal is that market value might not be the better choice over retail value, given all the info that we’ve already shared. In fact, some insurers, like King Price, only insure cars for retail value because they believe that it’s the fairest value to offer consumers. More than that, the royal insurer also looks at your car’s value over time and how this impacts your car insurance premium.

That’s why they automatically calculate your car’s depreciating retail value and decrease your premium accordingly.

If you want to insure your car for a higher value, while paying a super cheap premium that will decrease monthly, then click here   for a commitment-free quote, or call 0860 50 50 50 to get in touch and chat about your needs.


Related Articles