WE all know the importance of insuring your assets especially your car, which is exposed to risk everyday you are out on the road.
And Car Insurance Day, which falls on 1 February every year, it’s an opportunity to remind each other on some important things to remember when taking or choosing your insurance.
The People’s Paper spoke to Wynand van Vuuren, the client experience partner at King Price Insurance, to help us better understand the ins and outs of car insurance.
He said when insuring your car, you normally have a choice between “retail value” and “market value” and now there’s a third option – “insuring your car for an agreed value”.
But what does each option mean?
“The retail value is what it would cost to replace your current car. In other words, this is what it would cost to buy your car from a dealer, considering its age, condition and mileage. The retail value is higher than the market value, which is what you’d be able to sell your car for at any given time,” said Van Vuuren.
Both retail and market values will depreciate over time, in line with the value of your car.
“This means that, if your car is written-off or stolen and not recovered, your insurance payout wouldn’t be enough for you to replace the car with a brand-new model,” said Van Vuuren.
He said insuring your car for an agreed value means exactly that: You’ll be covered for an amount that’s agreed between you and your insurer, for an agreed period.
This means that if your car is written off or stolen, you’ll know exactly how much your payout will be.
“Agreed value insurance has traditionally been reserved for classic and rare cars that are hard to replace in the open market, but it’s starting to become an option for car owners who want the certainty of knowing how much they’ll be paid out if disaster strikes,” said van Vuuren.
Obviously, insurance premiums for agreed value policies tend to be higher, because the agreed value would be higher than if your car was insured for a market value.
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So between these options, we asked which deal is better?
There’s no right or wrong answer.
“When deciding what car insurance cover is best for you, you need to compare apples with apples – or in this case, comprehensive cover with comprehensive cover. But, when it comes to deciding between market value or agreed value, it all depends on your personal circumstances. How do you value your car in relation to the market? How much can you afford for your monthly premium? Insuring your car for its market value means a lower premium, but also a lower payout. Agreed value means higher premiums, and 100% certainty when it comes to your settlement. The important thing is that you have options,” added Van Vuuren.
