Car Insurance Types

Your Guide To The Types of Car Insurance Available

Buying a new car can be a long, complicated and exciting process, whether it’s a work car, your daughter’s first car, or even just a second car. As you probably know by now, one of the most tedious aspects on your journey towards a new car is selecting the best car insurance which will have the most beneficial result. Luckily for you, the Loans 123 Insurance team is happy to help.

One of the most important choices you’ll make is which comprehensive car insurance types to use, whether its market value or agreed value. Depending on the car and the owner, the age, the special features or modifications and the current open market, either of these choices could be the right insurance for you. Regardless, both market value and agreed value car insurance have their own advantages and disadvantages depending on the car type and cost you select.

Market value car insurance

Market value car insurance is an industry term which refers to the value your vehicle in its current stare would have in an open market. Apart from the industry guidelines and vehicle valuation, the factors which the insurer will uses to determine the overall market value of your vehicle given the event of it being damaged beyond repair or stolen includes, parking conditions of your vehicle (i.e curb parking or secure parking), the safety and security features of your car, and lastly, your suburb and postal code.

In the event of your car being stolen or damaged beyond repair, your chosen insurance company will reimburse you with an insurance payout of the market value of your car. This means that if your car is written off, stolen, or if you have an accident, the insurance value you will receive is the value which your car was before the incident. For example, if you had a five-year-old Toyota Camry, at the time for $8,000 but when it was written off it’s worth was $7,000. The $7,000 is the amount you’d receive.

As the value of the vehicle depreciates, so does the market value insurance received, therefore you’ll receive less in a claim as the vehicle gets older. However, it is possible you’ll need to pay an excess or a one-off payment to your insurer in order for your claim to be paid. The amount may differ, depending on the initial agreement with your insurer.

Due to the fact that your payout is during the same market time as your search for a replacement car, it’s likely you’ll be able to find a similar vehicle in a similar condition in the same spending range as your previous one.

Who is market value insurance good for?

Market value car insurance is suitable and more rewarding for those with an older car. This is due to the depreciation slowing down as the car gets older. Therefore, it’s less likely that the depreciation will have an impact on the market value. Selecting market value car insurance increases the stability and likelihood that you’ll receive enough to cover for a replacement car, making it the ideal choice for those looking to buy older, second hand cars.

The advantages of market value insurance

Market value car insurance has many benefits involved. For instance, the premiums are typically lower for policy holders. Another benefit is that if the car is written off or stolen, you may be able to receive a payout large enough to cover the costs of a similar model replacement vehicle in a similar condition, due to the halt in depreciation of older cars, as covered above.

The disadvantages of market value insurance

The disadvantages involved with market value car insurance can differ depending on the vehicle you’ve chosen to insure. Due to the depreciative nature of cars, it’s likely that if you choose a newer car to insure and it’s been either stolen or damaged beyond repair, it will almost positively be a large amount less than what you’ve paid for the newer car. It also isn’t a desirable choice for those with customised cars or cars with specialised parts or features added to them.

Agreed value car insurance

Agreed value car insurance is virtually the complete sum of money which has been agree upon between the owner of the car and the insurer, after lengthy discussion of details and agreement.

Agreed value car insurance usually comes with larger premiums for the owner of the vehicle, as overtime, as the car depreciates so will the market value. Therefore, if the agree value insurance is for a newer car, likely to have a large depreciation in market value, the amount payed out in the event of the vehicle either being stolen or written off, is most likely larger than the market value.

Who is agreed value insurance good for?

Agreed value car insurance is a good choice for those who have purchased a car with special modifications, features, attachments or new. Due to the rapid depreciation of new cars, usually a customer who purchases one will select an agreed amount, so if you need to replace your car, it would be easier to do so. Also, if your car is on a loan it’s usually a desired choice to select agreed value as it makes sure that if your car is written off or stolen, there will be little gap in between the outstanding loan repayments and the received insurance pay out.

The advantages of agreed value car insurance

Agreed value care insurance is usually the most beneficial for those with either newer cars, or cars with special features, modifications or attachments. Usually those who own these cars are more at ease knowing that the value of the insurance and their car, age, condition and features included, is set at an agreed amount between the insurer and the owner.

The disadvantages of agreed value car insurance

The disadvantages of agreed value car insurance is set around the premiums. Due to the notion that the amount received is likely higher than the market value in the event of an incident, the premiums are typically higher than if you were to select market value insurance.

Conclusion

Overall, the decision on selecting the best type of comprehensive car insurance depends heavily on the age, condition and special features of the car. There is no right or wrong option when it comes to car insurance.

If the car is an older model, market value car insurance is more desirable due to the slowing depreciation of your vehicle. Market value car insurance will result in your car insurance payout being the typical value of your car in an open market, allowing easy replacement with a similar model and condition vehicle.

If the car is a newer model or if it has special features or modifications, agreed value car insurance is typically more advantages to select as regardless of the depreciation value of your vehicle, the amount received in an insurance payout is the amount originally agreed to by both the owner and the lender.

Contact the Loans 123 insurance team for more information on which are insurance policy is the perfect fit for you.