Is agreed value car insurance better for you? |

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How does agreed value car insurance work?

When you take out agreed value car insurance, you agree on the value of your vehicle with your insurer, and the car is insured for this amount. Agreed value will not decrease over time. The alternative to agreed value is market value, which is recalculated whenever you make a claim, and is equivalent to the car’s standard retail value plus depreciation..

  • The most you can claim with an agreed value policy is the amount you decided on before taking out or renewing the policy. This sum is listed on your insurance certificate and is up to you. Typically, you can only adjust it at policy renewal time.
  • The maximum amount you can claim from a market value policy is only calculated when you actually make a claim. It is determined by your car’s make, model, age and condition. is not listed on your insurance certificate and you have little control over it.

The agreed value is the most you can claim, all up, in the event of a total write off. If you don’t have agreed value car insurance, then your maximum possible payout for a write-off will roughly be the resale value of the car at the time of the accident.

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What are the features of agreed value cover?

  • You get to choose how much your car is worth, rather than letting the insurer decide.
  • A higher agreed value will lead to higher premiums, while selecting market value, or a lower agreed value, can reduce your premiums.
  • Agreed value can be applied to almost any car, while market value is more suited to standard consumer models.
  • Exclusions, and all the usual car insurance terms and conditions will still apply. Just because you’ve paid for a higher agreed value doesn’t mean you’ll necessarily be able to claim it.

Up in flames

Mercedes 1980s S Class Parked By River

John had spent nearly 15 years restoring a classic Mercedes 2026 S which he kept park in an exterior shed of his property. John had the car insured under agreed value cover for $90,000. Late one evening, John awoke to see the garage up in flames from his bedroom window. By the time local firefighters had arrived all that was left of the garage and car were mounds of ash and scrap metal.

The insurance company declared the vehicle to be a total loss. As the vehicle is outside of the 2 year replacement , John is paid the agreed value of $90,000.

Who might agreed value cover be suitable for?

Agreed value is easy to find, but is generally the less common option and may not be available from all car insurance providers. Conversely, some specialist car insurers will only offer agreed value policies.

When is agreed value insurance preferable?

  • Modified cars. Aftermarket extras and modifications can raise the value of a vehicle well beyond its apparent sticker price. The easiest way to get cover for any modifications can be to calculate their value and add this into the car insurance sum insured.
  • Vintage and antique cars. The market value calculation of antique cars will typically be way too low. With agreed value you can find a level of cover that more properly captures the rarity and additional value of the car.
  • Luxury and high-power cars. High-end, high-powered and luxurious cars, including just about any supercar, will usually be more effectively covered by agreed value. These are not typical vehicles, and depreciation won’t usually apply at normal rates.
  • Cars under finance. If you still have finance owing on your car, agreed value means you can insure the outstanding loan as well as the actual vehicle. This can be invaluable in the event of a serious accident.
  • Imported vehicles. A car that’s not normally available will not necessarily have a defined retail value, in which case agreed value would be your best bet.

Not sure if it’s right for you? Here is the good and not so good to consider


  • You can claim the full, agreed-upon value of your car in the event of an accident.
  • You can get cover for almost any vehicle, including rare, modified or valuable cars.
  • The insured value of the car is fixed and will not change unduly.
  • You can choose a lower agreed value to save money on premiums, although the amount you are covered for will be reduced.


  • Agreed value car insurance is usually the more expensive option.
  • You may end up over-insured and pay for more cover than you need, or under-insured and without adequate protection.
  • Agreed value is not always available. Sometimes it may only be an option with comprehensive cover, and some insurers don’t offer it at all.

Agreed value pitfalls to watch out for

Weigh up the pros and cons, but also be aware of some of the pitfalls you may encounter.

  • Sub-limits: These are limitations on the amount of coverage for certain items in the policy. For example, your policy might specify a maximum of $500 for broken glass claims, and $1,000 total for all modifications. Whether or not you opt for an agreed value policy, the sub-limits will still restrict the amount you can claim.
  • Renewal: Remember to reassess your agreed value sum insured at each renewal period. Your car might change in value, either up or down, which will affect the suitability of your cover.

How much should I insure my car for?

Try asking yourself some of these questions when deciding on an agreed value:

  • What type of car insurance am I getting? If you’re looking for agreed value, you’re probably getting it with comprehensive cover.

Check whether your policy counts comprehensive extras claims, such as for roadside assistance, towards your agreed value sum insured. If so, it might be a good idea to choose an agreed value slightly higher than the total value of the car. This means your policy has enough cover to also pay for roadside assistance, towing costs and other comprehensive car insurance features. The right sum insured depends on the type of policy you’re getting.

  • How much will it cost to completely replace the car? If you’re having trouble working out how much your car is “worth”, it can help to instead think of how much it would cost to completely replace the vehicle in the same state as it is in now.

A good comprehensive car insurance policy should cover these costs entirely. However, it depends on your finances. Your car’s uniqueness might preclude market value cover, but your budget might preclude purchasing cover for all potential costs.

How much does agreed value car insurance cost?

The cost of premiums is typically dependent on a range of factors:

  • The car’s year, make and model. More common and popular cars, and those that are cheaper to repair, are generally cheaper to insure. The same is true of models with spare parts that are easily accessible, and that have a manufacturer repair network in Australia.
  • Your location. Riskier areas incur higher premiums. Similarly, parking your car on the street instead of in a garage can also raise the risk levels, and therefore your premiums.
  • Security measures. Microdotting, car alarms, garage alarms, immobilisers and other security systems can reduce the cost of insurance.
  • Age. Older drivers over the age of 50, as well as younger drivers under 25, can expect to pay more for insurance.
  • Modifications and extras. Even with market value, approved manufacturer and aftermarket extras can be factored into the value of the car. However, this is typically only possible with specific approved modifications, such as safety features or those which do not affect the car’s performance in any way. With agreed value car insurance, you can choose your own sum insured to include the cost of all modifications, even the ones which can’t be covered by a standard policies. For example, you probably wouldn’t select agreed value just because you have a custom paint job, but might want to consider it if you have suspension, engine, bodywork or other performance-affecting modifications. Remember to check the exclusions of your policy. Even with agreed value, some modifications may still be excluded.

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