Car insurance renewal - agreed vs market value

bs0 on 31/01/2022 - 13:21

Wondering if anyone has had experience recently claiming reasonable market value from their comprehensive car insurance?

I'm trying to figure out whether to switch from agreed value to market value, because 2nd hand cars are so expensive right now.

i.e. 2012 car, for same excess fee, NRMA:

  • $600 premium, second hand car market value is around $11000-15000, but I guess there's a wide variety of factors.

  • $750 premium, agreed value $8xxx (default agreed value, slightly less value than last year's renewal from memory).

  • $1000+ premium for raising agreed value >$10000

My problem is if my car is a write off, I couldn't replace it for something similar for $8k
Thanks

Financial Car Insurance Insurance

Comments

  • Melb69 on 31/01/2022 - 13:25

    It's all about how you want to consider your risk if car written off. If you can afford the higher premium for a higher agreed fig consider that. Otherwise you will just have to make up the short fall.

  • bobbified on 31/01/2022 - 13:33

    I would always try to go 'agreed value' and up the value (to factor in things like transfer fee, etc when buying another car) as much as I can because if my car gets written-off, I'd like the payout to be enough to replace my vehicle (or as close as I can to a one for one replacement anyway).

    That obviously increases the premium and if that becomes too high, it's a matter or balancing out to what you're comfortable with paying annually vs the payout.

  • holdenmg on 31/01/2022 - 13:33
    +1

    If your Car was a write-off, would you want a ten-year-old car again?

  • pharkurnell on 31/01/2022 - 13:37
    +1

    Depends how much you can afford to lose.

  • CaptainHoltisDad on 31/01/2022 - 13:39
    +1

    The cheapest $600 premium is going to get you at least $11k , compared to $750 premium for only $8k. The first option seems to be the pick of the bunch, although you're slightly at the mercy of the insurer determining the market value. There probably aren't that many 2012 equivalents to compare against either.

  • desty on 31/01/2022 - 13:48
    +1

    Since covid has affected uses car prices so much, I’ve been having the same dilemma.
    Last year at renewal time I rang my insurer and asked them:
    a) how do you determine market value
    b) can you tell me how much “market value” is for my car should it be written off today

    I found they use their own data sources (eg like a redbook or equivalent) and that their market values had absolutely NOT tracked with covid price increases for 2nd hand cars.

    At the time I went to agreed value due to the above. Come renewal time this year I’ll be doing the same, hopefully their numbers are becoming more in line with reality now…

    Agreed value is so much more expensive and I can’t even increase it to the actual cost to replace my car. Have it on maximum and still underinsured.

  • Stalker on 31/01/2022 - 13:58
    +1

    Always go for agreed value - for the certainty if nothing else.

  • TurboTortoise on 31/01/2022 - 14:17

    Just faced the same dilemma for 2 cars. In the end the maximum agreed value the system would let me get a premium quote for was still well less that likely replacement cost and was 50% more than market value. So in the end have gone with market value, took a few photos and have also saved recent 2nd car sales for equivalent cars. If it gets written off I will have a go at challenging their 'market value'. Not sure of my chances if that ever happens…

  • Seraphin7 on 31/01/2022 - 15:16

    Insurance is all about risk mitigation.

    In this sense, you can pay a lower premium where the downside risk is that the market value is not what you require/what you might otherwise receive, but the upside risk is you in effect get the agreed value payout for a lower premium.

    Or you may a higher premium where both the downside and upside risks are much smaller.

    The other perspective here is to consider what are you really insuring? If you are really insuring for third party damage, but with a reasonable loss mitigation on your own vehicle, the cheaper premium will be the way to go. If you are really insuring the value of your car (and of course third party), the higher premium may be preferable.

  • koplik8 on 31/01/2022 - 15:35

    Always do an agreed value. My friends car was a right off and the insurance company gave her the exact amount that's on Redbook as the trade in value. She didn't even get enough money to replace the car

  • apple2016 on 31/01/2022 - 16:27

    I usually go the agreed value (with the actual price i paid for or a reasonable price). This is usually bit higher than market value and the premium increases. But I also opt for a highest excess($2000) to reduce the premium. This works fine if its a not at fault accident scenario. however you will have to pay the higher excess at other times.

  • bs0 on 31/01/2022 - 19:53

    Thanks for the replies.
    Doesn't seem anyone has been in the unusual situation where they have claimed successfully when market value was > agreed value.
    Guess I'll have a think about it a bit longer.

    • El cheepo on 01/02/2022 - 08:46
      +1

      My friend had an accident and was offered 6k by their insurer on a car that in a normal market would be worth 8k tops (based on redbook)

      She challenged them multiple times to find another car same year/age/condition and got a further 2 offers.
      8k offer which she rejected as well and then settled on 13k as that was what all similar cars were currently priced around.

      Blew my mind she negotiated over double their initial offer on market value. But it was damn inspiring, so my cars are market value now haha.

      • Love a bargain on 01/02/2022 - 14:42

        Just out of interest, which insurer was that?

        • El cheepo on 01/02/2022 - 21:20

          From memory i think it was budget direct. But could be wrong.

    • Stalker on 01/02/2022 - 09:59

      Think about it all you want, the answer is to go with agreed value.

  • Klevakiwi on 04/02/2022 - 13:04

    Went through the exact same thing this week. The brides 2017 car with 26000 kilometres on the clock is due for renewal,Insurance companies Market value was 13K. Cant find one on car sales under 18K. Premium was $431. p/a.
    Phoned them up decided on agreed value of $18750.00, excess and premium remained the same. Go figure.

    • Stalker on 04/02/2022 - 18:52

      Yep, it sometimes does change the excess and premium, but often not by as much as you would think. Another tip for new players is that the agreed value gets revalued downwards on the anniversary / expiry date of the annual policy…so you need to agree the value every year.

      No insurance company is going to pay out a reasonable market value unless you fight them hard for it.

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