MARKET VALUE POLICIES

With a market-value policy, if the the car becomes a total loss, the amount paid to you will reflect the actual value of the vehicle immediately before the loss occurred. This value will take into account the condition and depreciation that will have occurred to the vehicle since the policy began. The ‘sum insured’ in this case is the maximum that the insurer will pay. For example, if the vehicle’s sum insured was $10K, and, immediately before the loss occurred, the market value had dropped to $9K, then the insurer would pay out $9K. However, if the market value had appreciated to $12K, the insurer would pay out the sum-insured amount of $10K. This form of cover is better suited to modified or bespoke vehicles, as the value of these vehicles will change in a different way to that of standard, unmodified vehicles. Additionally, the value of the car may be difficult to determine at the start of a policy — an estimate will be sufficient. Note that the sum-insured value will be reassessed at the start of each new policy period, the same as with agreed-value policies. For either form of insurance, it’s important to get a reasonably accurate assessment of your car’s value so that you can insure it for what it’s really worth and get the right level of cover. NAC recommends that you obtain a valuation from a licensed motor-vehicle dealer or a car valuer. Also, you don’t have to wait for your policy to renew if the value of your car changes; you can ring your insurer at any stage throughout the term of the policy to make a change. However, if you want to increase the sum insured, you may be asked to provide a valuation report in support of your request. At the same time, remember to update your insurer with any changes that might have occurred to you or the car since you last had contact with them. Things like modifications or convictions may affect the cover you have. It’s best to tell your insurer upfront so that you both know where you stand with each other, rather than finding out that the changes mean that you have no cover right when you need it most.