When buying insurance for your vehicle, you have the option to either cover it for its retail, market or trade-in value. Most people do not realise the difference between these insured values, but it can make a big difference to the pay-out when you claim in the event the vehicle is written off or stolen.
When you buy a car from a dealership, you pay retail value. If you insured your vehicle for its retail value and you claim for a theft or write-off, you will be able to replace it with the same make and model.
Trade-in value is the amount a dealership would pay you if you traded your vehicle in. This amount will be lower than the retail value as the dealership needs to make money on car sales. Dealerships buy cars at trade-in value and sell it at retail value.
Market value is the average of the retail and trade-in value. A few factors play a role, like the mileage, accident- and service history and general condition of the vehicle. When you sell you car privately, you will probably get an amount close to its market value.
The mileage and condition of the vehicle may adjust the retail, trade-in and market value down or up.
What is the Best Insured Value for your Car?
The best insured value depends on your needs. A few factors need to be considered – how much is still owed on the car, whether you would like to get the same make and model in case the vehicle is stolen or written off and the cost of the monthly insurance payments. The monthly insurance payments will increase if the vehicle is insured at a higher value. It is important to keep within your budget to ensure that you can keep up with the monthly insurance payments.