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Market, Retail or Trade Value Car Insurance?
Thursday, 27 August 2009 18:31
As the short-term insurance Ombudsman so accurately stated, insurance is “indemnification not enrichment”, which means that after an unfortunate incident your car insurance company will help you to be in the same financial position as before the event. How much do you then insurance your car for?

Insurance companies often let you choose whether to cover you car for market value, retail value of trade value. The different types of cover influence the amount of your premiums.

If the car is new, you can determine the amount to insure it for based on the retail value, that is, how much you paid for it. This value doesn’t depreciate but the value of the car does. As soon as you drive off the show-room floor the value of the vehicle drops. Don’t keep your car insured for retail on an ongoing basis, your car is not valued at that price for very long and your premiums will be high.

Trade value is about R10,000 less than retail and is the cheaper option. Considering the rapid rate of depreciation of vehicles, it’s the more sensible route.

Market value is best for used cars. This value is the average of retail and trade and can be determined by checking how much similar models go for in a car magazine. If you do a lot of traveling however, market value might be a waste of money as insurers won’t pay out the full market value cars with high mileage.

Whichever option you choose, be careful not to underinsure your vehicle to save on insurance premiums. If you do, you won’t be able to replace your vehicle when claiming from your insurer.
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