Market value or agreed value? What’s the difference?

It is likely that you have been asked to choose between market value or agreed value when seeking a car insurance quote. In the most simplest terms, market value or agreed value is the amount that your car is insured for and what you would receive if your car was written off or stolen and not recovered.

There are pros and cons to both of these types of cover so it is worthwhile to read up on the differences so you can figure out what type of cover is right for you.

Market value

Market value is what your car would get in the market at the time a claim is made. It is not the same as trade-in value or the cost of replacing your car. It takes into account your car’s condition just prior to the claim and compares it with other cars of the same make, model, age and mileage, in a similar condition.

The main benefit of market value policies is that they are generally cheaper than agreed value policies. This is good option for you if you are looking to save money on your car insurance costs.

Keep in mind that over time your car’s value does depreciate in the market so as your car gets older, you get less money back from the insurer. If this does not appeal to you, an agreed value cover may be more suitable.

Agreed value

Agreed value is the amount that you and your insurer agree upon at the time you take out a car insurance policy. If your car is written off or stolen and not recovered, the insurer is committed to paying you the agreed value for your car.

You also have a little bit of flexibility in how much you would like the agreed value to be. Insurers will normally offer you a range from which you can select the agreed value for your policy.

These policies tend to be a bit more expensive than the market value policies. However, you have absolute certainty about how much money you will receive from your insurer if your car is a total loss, which can be handy if you have a car loan or other type of finance owing on the car.


What’s better?

Remember there is no wrong or right answer as to which one is better. It’s up to you to choose which one works better for you and your circumstances. If you would like to discuss your options, speak to our Insurance team on 1300 654 166.

Note: some levels of car insurance cover may not offer a choice between market value and agreed value, so it is always worthwhile asking your insurer what would you get in the event that your car is written off.