Introduction
Many car owners are unaware when their car is under-insured. As a result, insurance payouts may fall short if an accident occurs. Moreover, understanding the difference between market value and agreed value helps you make informed decisions. For example, choosing the right coverage ensures your vehicle receives full protection. Equally important, regular updates to your sum insured keep your policy aligned with your car’s current value. This article breaks down these concepts and guides you on selecting the best coverage to safeguard your vehicle.
1. What Is Under-Insured?
- A car becomes under-insured when the Sum Insured (SI) does not cover its actual value.
- In an accident or major damage, the insurance will only pay based on SI, not the full repair cost
- The risk is highest for luxury or imported cars
2. Market Value vs Agreed Value
- Market Value → insurance pays according to the car’s current market price on the day of the claim
- Agreed Value → a pre-agreed value at policy purchase; insurance pays the fixed amount even if market value drops
- Agreed value is usually more expensive but protects owners from significant losses
3. Tips to Avoid Being Under-Insured
- Check the current market value when purchasing insurance
- Choose agreed value for new, imported, or limited-edition cars
- Update SI if the car has been upgraded or market value increases
- Use BJAK services to compare values and policies for accurate coverage
Conclusion
As a result by knowing whether your car is not under-insured is key to optimal protection. Understand the difference between market value and agreed value, select the right policy, and regularly check your SI so insurance claims fully cover damages. Proper coverage = safer and less financial risk.
Read More:
Accident But NCD Doesn’t Drop? Here’s How
