Choosing the correct car insurance policy to suit your needs is the first step in keeping your car protected. Next, make sure it is covered for the correct value. The value you insure for can influence your pay-outs and your monthly premiums.
Many motorists suffer financial loss because their cars are not adequately insured. There are three different values for car insurance policy market, retail, or trade. There are pros and cons to each, and it is essential to understand what they are before you choose which value to insure for.
If you have a new car, determining the amount to insure for is usually based on the purchase value or retail value. The best value to insure for if your car is used or older than 2 years is usually the market value. The market value of a vehicle is the average of the car’s trade and retail values. Your car’s market value can be determined by looking up current prices for similar models for sale in the newspaper or in one of the car magazines.
The trade value is the amount a dealer would offer you for a trade-in. This is usually the lowest value. The lower the value you insure for, the lower your premium, generally.
Motorists should, at all costs, avoid taking out car insurance below the actual value of their in an effort to save on insurance premiums. Why? If you need to claim, you may find the amount your insurance pays out does not cover the cost to replace or repair your car. You could end up having to pay a large sum to fix or replace your car!
Please note: This document does not replace the terms and conditions of the customer’s insurance policy. Please consult the terms and conditions of the relevant insurer. The customer is obliged at all times to provide true and accurate information to the broker and the insurer and needs to update this information on a regular basis.