Market or Agreed Value Car Insurance? - Which one you should go for

Market Value vs Agreed Value Car Insurance

Agreed and market value car insurance: How are they actually different and which one should you go with?

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One of the many decisions you will encounter when picking a car insurance policy is whether you should insure your vehicle for an agreed value or for its market value.

  • Market value: The “standard” option. Your car is insured for its current market value at any given time, including depreciation.
  • Agreed value: You and the insurer agree on a specific value ahead of time. Your car is considered to be worth this much for the purposes of the insurance policy.

The value you decide upon is the sum insured, which is the total amount of cover you have. This amount will affect when your car is written off, repaired or replaced under the terms of your insurance policy.

If you are involved in an accident and the cost of your repairs is more than the sum insured, your car will be written off and you can claim the total value of the sum insured to spend on a new car, or not, as desired. If you’re in an accident and the cost of repairs is less than the sum insured, your car insurance will cover the cost of the repairs.

Compare policies with agreed and market value

Name Product Roadside Assistance Accidental Damage Storm Choice of Repairer Agreed or Market Value
Budget Direct Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: Awarded the 2019 Finder Award for the Best Value Car Insurance, this policy offers solid coverage at a low cost plus you will get 15% discount on first year's premium when you take out a policy online. Budget Direct’s claims service has received a 4.2/5 based on nearly 5,000 customer reviews.

Who it might be good for: People who want a comprehensive policy without breaking the bank.
Bingle Comprehensive
Market
Finder's summary:Bingle consistently comes up as one of the cheaper insurers out there. It only covers the basics, so you don't get to choose your own repairer, you're not covered for personal items in the car and unless you add it as an option, you won't get a hire car if your car is stolen. But this keeps its premiums low.

Who it might be good for: Someone who wants a low-cost option that covers them for the basics.
Coles Comprehensive
Optional
Agreed or Market
Finder's summary: Coles have two-tiers of comprehensive car insurance to choose from. You'll earn double flybuys points at Coles supermarkets and you can get $10 off your Coles grocery bill every time you redeem 2,000 Flybuys points. If you're over 30, you can get roadside assistance free for a year.

Who it might be good for: Coles customers and Flybuys collectors.
Poncho Comprehensive
Agreed
Finder's summary: Poncho works like a monthly subscription – you pay monthly and can cancel and leave at any time. You can also list multiple cars and drivers under one policy, making it ideal for families and groups living together under one household.

Who it might be good for: People who want their car insurance month to month.
Woolworths Comprehensive
Optional
Agreed or Market
Finder's summary: Woolworths catches our eye due to some unique perks like a price-beat guarantee, where it'll beat any current comparable comprehensive renewal notice if you're over 25. You'll also get 10% off your grocery shop once a month and can add roadside assistance onto your policy for just $7.35 per month.

Who it might be good for: Woolworths shoppers and those that want to take advantage of its price-beat guarantee.
Qantas Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: You'll be able to choose how comprehensive you want your cover to be with optional extras like choice of repairer and the option of agreed or market value. Plus earn Qantas Points for joining and paying your premium. Sign up by 2 May 2021, you can earn up to 30,000 Qantas Points (points awarded will be based on your premium). T&Cs and eligibility apply.
ahm Comprehensive
Optional
Both
Finder's summary: ahm comprehensive car insurance lets you choose higher excess to reduce your premiums plus you can get up to 15% off when you purchase a new car insurance policy. T&Cs apply. Additionally, their Fixed Kilometre Plan can save you up to 30% compared to their standard comprehensive cover.

Who it might be good for: People who drive less than 15,000 km per year.
Virgin Comprehensive
Optional
Optional
Agreed or Market
Finder's summary: Finalists for the 2019 Finder Awards for Best Value Car Insurance, Virgin Comprehensive provides a good level of cover for a decent price. Get 15% off on your first year’s premium when you purchase a new eligible comprehensive car insurance online. T&Cs Apply.
QBE Comprehensive
Optional
Agreed or Market
Finder's summary: QBE is a sustainable insurance company and also Finder's Green Insurer of the Year 2020 Award winner. This policy offers the highest level of protection available from QBE including three-year new car replacement. You can also save $75 when you purchase a new comprehensive policy online. T&Cs apply.

Who it might be good for: Those that are looking for a more environmentally friendly insurance choice.
Stella Comprehensive
Optional
Agreed or Market
Finder's summary: Stella’s a female-focused insurer. It'll cover you if your car is damaged as a result of domestic violence. It offers higher cover for baby gear than most, with up to $2,000 cover for prams, strollers and child seats. Get $50 cash back when you purchase online between 1 April – 30 June 2021 using the code STELLA50. T&C apply.

Who it might be good for: Someone who wants a female-centred car insurance policy (it will cover men too).
Youi Comprehensive
Optional
Agreed or Market
Finder's summary: Youi Comprehensive Car Insurance is one of the few providers to include roadside assistance in its policy. You'll also get access to YouiRewards which gives you discounts on furniture, parking and more. Youi also has a live chat feature on its site to talk through any questions.

Who it might be good for: People over 25 who want comprehensive cover with a focus on customer service
Real Comprehensive
Optional
Agreed or Market
Finder's summary: Real Comprehensive Car Insurance provides similar coverage to other insurers for the important stuff like looking after your car if it's stolen or you crash. They're also one of the few insurers who offer a Pay As You Drive policy, so you might be able to save big if you don't drive much.

Who it might be good for: Those that don't drive much can take advantage of their Pay As You Drive policy.
Australia Post Comprehensive
Optional
Agreed or Market
Finder's summary: Australia Post car insurance offers comprehensive cover for things like theft, fire, new for old replacement and emergency accommodation and transport. Cover also extends to anyone who uses your car, not just you.

Who it might be good for: If multiple people use the one car and you don’t want to worry about listing all drivers.
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How do they compare on price?

Agreed value policies typically cost more for two reasons:

  1. The agreed value sum insured is typically higher than the market value sum insured. A larger sum insured comes at an additional cost.
  2. Your agreed value will stay the same over time, while the market value will typically decrease. This tends to reduce the cost of market value policies over time, while agreed value policies will not get the same benefit.

In addition to this, agreed value policies are not always available from standard car insurance providers. Agreed value may be available as an extra option that carries additional costs.

The benefits and drawbacks of agreed value and market value cover

The pros and cons of market value

Pros:

  • It’s usually cheaper.
  • Your sum insured is automatically updated to the standard market value.
  • You avoid paying more than you need to.
  • It’s typically more convenient.

Cons:

  • Your vehicle’s market value might be less than you think.
  • A well-maintained car might be undervalued according to the market value.
  • In the event of a claim, your payout may be considerably lower than an agreed value policy.

The pros and cons of agreed value

Pros:

  • You know exactly how much you are insured for.
  • You are able to insure your vehicle for less than its market value to save money.
  • You are able to cover the cost of modifications, aftermarket extras and other considerations.
  • You can choose your own level of cover to properly reflect the importance and value of your car.

Cons:

  • It typically costs more.
  • It requires some form of valuation.
  • Restrictions may apply to the age, value or type of car that can be insured at agreed value.

So which option is best for me?

The right policy for you depends on your situation and you should always consider the benefits and drawbacks of each policy in line with your own needs. However, if you’re having trouble deciding, try considering the following situations:

  • Do you own a rare, vintage, modified or classic car? You probably want agreed value, as it will be much more accurate in reflecting of how much these kinds of vehicles are worth, including modifications and aftermarket extras.
  • Was your car expensive? If your car was a major investment, then agreed value is a good way of protecting it in the long run. With market value you may only be able to recover a fraction of the amount you paid in the event of a total loss.
  • Do you plan on getting a new car soon? Hopefully you won’t have to make a claim before then and you can save time and money by opting for market value.
  • Is saving money your top priority? If so, a cheap car insured at agreed value might be the right type of cover.
  • Do you need a car? Is your car absolutely essential for getting to work, or is it more of a convenience? If it’s a necessity, then agreed value means you know you’ll be able to afford a new one if your current car is written off. Market value may not provide you with enough of a claim payout for a suitable new car.

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2 Responses

    Default Gravatar
    JohnMarch 5, 2018

    Can an insurer write-off and cancel the licence on a vehicle without advising the owner?

    After hitting a kangaroo, we checked car, all well safety wise, bar both headlight glass broken lights still good. bonnet bent but still locks , tracks straight , stops straight.so drove over 300 kms home. The repair cost was within a few hundred dollars of their write-off amount. We were still contesting their payout amount & driving the car, as vast distances are involved.

    On the 1/03/2018 in the mail, we were informed by Department of transport that on 21 /02/2018 the licence had been cancelled, and unbeknown to us, we had been driving a unregistered vehicle.

    We did agree to have the car repaired at no extra cost to the insurer on the 1/03 /2018 after a phone conversation with the insurer, Cash Settlement to be made, vehicle to be left REGISTERED. We keep salvage of said vehicle.

    Is there anything we can do to have the insurer have the car registered so we can have it repaired? We are 900 kms from a major city , to licence a written-off vehicle we will need to have the car carried to an inspection point that is accredited by dept. of transport to pass inspection , as there is no accredited repairers for written off vehicles anywhere near us.

      Default Gravatar
      LiezlMarch 7, 2018

      Hi John,

      Thanks for reaching out to Finder.

      I’m sorry to hear that you were taken by surprise that your vehicle was registered as repairable write-off and that the registration was cancelled. The Motor Vehicles Regulations 2010 didn’t specifically state whether the insurer needs to notify the owner before it gives notice to the Registrar in relation to the vehicle’s assessment. They are however, mandated to notify the Register within 7 days from when the determination is made by them to write-off the vehicle. Time constraint could be a factor why you weren’t informed beforehand. You can ascertain the exact reason from your insurer directly. You can also call VicRoads on 13 11 71 to discuss your concern about the vehicle written-off process.

      As to re-registering your car, you need to have it repaired and assessed as roadworthy during the VIV inspection first before you can register it again. You can reach out to VicRoads Vehicle Fitness Section on 1300 360 745 to discuss the technical requirement of the VIV inspection. You might also find VicRoads’ written-off vehicles FAQs informative.

      Now, regarding the repair costs and settlement, it’s a good idea to have those in writing just in case you will need them along the process. Moreover, you can also seek professional advise on the matter.

      I hope this information helps.

      Cheers,
      Liezl

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