Agreed versus market value
Comprehensive motor insurance generally offers two types of sums insured, market value and agreed value.
These are the criteria that are used when assessing the value of the vehicle that has been written off, either by accident or theft, or is deemed uneconomical to repair.
Agreed value as the name suggests is a value that is agreed upon at the commencement of the policy period. Most commonly the agreed value is offered by the insurer based on the current market value of a similar vehicle according to particular market guides (Glasses Guide, Red Book etc.)
This agreed value can be challenged at policy inception if the insured feels their particular vehicle is worth more than a standard vehicle due to low kilometres, excellent condition, accessories etc.
Once the agreed value has been set there will be no arguments if the vehicle is written off, you will be paid the specified amount (less any excess, outstanding finance, or possibly GST).
If your car is a write off and insured for market value, you will be offered the current market value of your particular car based on the findings of an independent assessor appointed by the insurer.
This will take into account such things as the condition of the paint, panels, interior, number of kilometres travelled, service intervals and comparisons with similar vehicles currently for sale in the market. For this reason it is recommended that you consider taking photos of your vehicle if you feel it is in a much better than average condition as this could be difficult to substantiate if the vehicle is stolen and not recovered.
Once a vehicle reaches a certain age (over 10 years usually), agreed value may not be available as vehicles of this age tend to be ‘value dependent on condition’ (VDC) and Insurers are not able to ascertain an accurate agreed value.
Some insurers also offer ‘replacement value’ for newer cars.