INSURING YOUR CAR
What’s the difference between amount covered and market value?
7 January 2018
Insurance terminology can leave even the savviest shopper in a head-spin. And being unsure about what or how much you’re covered for is the last thing you want when you’re looking to insure your vehicle. We take a look at the difference between amount covered and market value, so when you get a car insurance quote or flick through policy documents, you’ll know what both terms mean and how they impact how much you’re covered for.
Amount covered
Your ‘amount covered’ is the amount your car is insured for. If you need to make a claim for loss or damage to your car, this is the most an insurer will pay. The amount covered can include the value of accessories and modifications that are fitted to your car, registration, Compulsory Third Party (CTP) or Motor Accident Injuries (MAI) Insurance, and GST.
Some insurers may refer to agreed value, which is when the amount your car is covered for is adjusted and agreed upon by both you and the insurer. For example, with an agreed value car insurance policy you can choose to insure your car for less than what it’s worth or more than what it’s worth. With GIO Car Insurance, you have the option to adjust the amount you would like to insure your car for – within a specified range – under your amount covered. Adjusting your amount covered will impact on your premium.
Market value
When researching your car insurance options, you may come across the term ‘market value’, which just means the amount you’d reasonably pay for your car on the open market, if you were to go out and buy your car again today. When you first get a car insurance quote, the default covered amount shown on your quote will usually be the market value. When insurers calculate the market value of your car, they include many factors, including age, make, model, kilometres travelled and the general condition of the car. They may also use recognised industry publications to assist in calculating the market value amount.
Whether you choose to adjust your amount covered or stick with a market value amount will depend on several factors. Some of those factors to consider are: whether you’re trying to save on your car insurance premium, the age of your car, and the determined replacement value of your car (you may believe your car is worth more, or less, than the determined amount due to its condition, service record etc.).
If you’d like to know more about the amount covered on your car insurance policy, then get in touch with one of our knowledgeable insurance specialists today on 13 10 10. Alternatively, get a Car Insurance quote online and don’t just think you’re covered, know with GIO.
Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Any advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before you make any decision regarding this product. The Target Market Determination is also available.
