Don't just accept the value of your car on face value.

When buying a car, one of the first and most important things you look at is the value or worth – can you afford to incur the cost of your new set of wheels? The next step would be getting your car insured, and again the value of your car will come into question. This underlines the importance of understanding the value of your car – not just when buying or selling it, but also when insuring it. The replacement value should be agreed upon to establish what monthly premiums should be – in order for you to know what you can expect in the event of a total loss claim.

The business of insurance can be tricky if you aren’t familiar with the jargon. Not understanding your policy schedule could lead to you accepting terms and conditions that will confuse or penalise you at a later stage – possibly putting you in unfortunate situations. It’s imperative to understand your insurance policy, but also to understand the different value levels your car can be insured for to ensure you know what and how much you are covered for in the event of an incident.

The 3 levels of value you will be asked about when taking insurance cover for your car are:

Retail value – This is the highest value at which you can insure your car. Retail value is the average price a car dealer would sell the vehicle for, taking its age, condition and mileage into account.

Market value – This is the average between the retail and trade value of your car and is therefore lower than retail value.

Trade value – This is the average price a dealer would pay you for your car when trading it in. This is the lowest value at which your car can be insured for.

It’s important to also consider these values as you need to know what you stand to get when claiming in the event of a total loss. When an incident causes extensive or costly damage to your vehicle, it's possible that your vehicle could be declared a total loss or a write-off.

When taking up car insurance with MiWay, you will be given the option to either insure your vehicle for its retail, market or trade value – or in certain situations, a special agreed value which was noted on your policy coversheet. This is the value you will be paid out, less the excess payment in the event of a claim. Should you be unclear on the value you are covered for, contact us and make sure your vehicle is insured sufficiently!

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