What Is Agreed Value in Car Insurance?
Agreed Value is the fixed amount you and your insurer agree upon when you buy your policy. This means if your car gets badly damaged or stolen, your claim will be based on that agreed amount — not the market price at the time of the accident. For example, if you own a high-value imported car, you don’t have to worry about depreciation or a sudden drop in market price. The payout remains the same because the value was confirmed from the start.
What Is Market Value in Car Insurance?
Market Value refers to your car’s current market price at the time of the claim.
Let’s say your car is three years old — its market value is naturally lower than when you first bought it. If it’s written off or stolen, your insurer will pay based on the market value, not the original purchase price.
This option suits older cars or vehicles that depreciate quickly. While the premium is generally lower, the claim amount may also be less compared to Agreed Value.
Key Differences Between Agreed Value & Market Value
| Factor | Agreed Value | Market Value |
| Claim Amount | Fixed and guaranteed | Based on current market price |
| Best For | New or imported cars | Older cars or fast-depreciating models |
| Premium | Usually higher | Usually lower |
| Risk | Guaranteed payout at claim | May receive less depending on depreciation |
Tips to Choose the Right Value
- For new or imported cars: Go for Agreed Value to lock in a guaranteed claim amount.
- For older cars: Choose Market Value to save on premium, but understand that the payout may be smaller.
- Before buying: Review your policy and ask your agent about the level of risk you’re comfortable with.
- Consider depreciation: Think about how much value your car loses yearly and how much you can afford to cover yourself.
Conclusion
Understanding the difference between Agreed Value and Market Value helps you make smarter insurance choices. By selecting the right option, you’ll have peace of mind knowing your coverage matches your car’s real worth. When the unexpected happens, your claim payout will align with your needs — without extra stress or surprises.
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