Looking at Insuring Your Tradie Vehicles?
You’ve made the first step and decided to insure your work car. Good move! After all, if your car is damaged or written off, it could cost you some serious money. If you use your car for work, it can mean an additional loss of income.
But now you’ve started getting quotes, things are getting confusing. Should you get a quote based on agreed value or market value? What’s the difference between the two? This decision will be based on a number of things and will depend on your personal circumstances.
Agreed value vs market value for Tradie Vehicles
If you take out a comprehensive car insurance policy based on agreed value, your insurer will insure for an agreed amount as decided when you took out your policy or at renewal time. This means that no matter when your car is stolen or written off, your insurer will pay out the fixed amount.
If you go with market value, it means that the insurer will pay you the current market value of your vehicle at the time the car is stolen or written off. Remember, the market value doesn’t mean what it would cost you to trade in or what a private collector would pay. It’s the sum you would get in open market.
What’s the difference?
The difference between agreed value and market value becomes most apparent when it comes to claim time. If you go by agreed value, it generally means your insurance premiums will be more expensive but you’ll get more money if your car is written off. For example, if you buy a $20,000 vehicle and insure it at the agreed value of the same amount, you’ll get your full $20,000 back. If you go by market value, chances are you’ll get much less than the original $20,000 due to the depreciation in value.
Generally, most people go with market value because it means more affordable premiums. Market value is usually a good option if you have an older vehicle or standard car with no modifications. For example, if you have a 10 year old car, the additional premiums that come with agreed value simply wouldn’t be worth it.
However, agreed value is a consideration if you have a newer or highly modified vehicle as the higher premiums are worth the increased amount you would receive if something happened to your car.
It’s a personal choice whether you go with agreed value or market value and for a lot of people, the decision comes down to finances and the type of vehicle you drive. For some tradies the higher premiums of agreed value simply aren’t worth it while for others the time and effort they’ve put into the car isn’t worth risking on market value. Have a look at difference policies and have a chat to your insurance broker for additional guidance.