Did you buy that luxurious new model Kia Forte and are now looking to get it insured?
Have you ever tired insuring a vehicle before?
Well, if you have, you probably know that car insurance companies are very particular about the car’s retail, market and trade-in value.
If you have no clue about what these are, here’s a detailed guide on insuring your car retail market or trade-in value1.
Trade, Retail or Market Value – What Price Should You Insure Your Car For?
When your car is totalled in an accident, your auto insurance firm compensates you for the market value of the totalled car – or more precisely, they pay for what it claims the value of your vehicle is.
Therefore, it’s essential to figure out the difference between the trade-in value, car retail market value2 and the overall market value of your car.
The difference between these insured values might not seem like a noteworthy issue to consider when you’re taking out a car insurance policy. Still, it can make a significant difference to your claim when your vehicle is stolen or written off3.
With that, here is a defined guide to these values to help you make an informed decision when taking out your auto insurance policy5.
Car Retail Value Insurance
If you purchased a car from a dealership, you’d pay the vehicle’s retail value. If your car is involved in an accident and it’s written off, or it’s stolen during a hi-jacking, you’d probably be able to replace it with a similar make/model if you insured it for its retail value.
You can use the retail value calculator to figure out how much or an estimate of you’ll get from your insurance claim4.
Trade-In Value/ Trade Value Insurance
It’s the price that a dealer would typically offer you for your older vehicle if you want to purchase another car from them.
The dealer will offset the cost of the new automobile against this proposed trade-in value – it’s the lowest amount you can insure your vehicle for since it’ll be lower than the retail value.
Thus, you won’t be able to replace your car for its current value if it’s stolen or written off.
Market Value Insurance
It’s the average of the retail and trade-in value. It takes into account various variables like mileage of your vehicle, your service and accident history, and the general condition of your sports car or van.
If you sold your automobile privately rather than through a dealership, then you’d probably get a price that’s close to its market value.
Tip: all the insured values might be adjusted up or down based on your vehicle’s conditions and mileage.
Is Market Value the Same As Retail Value?
The retail value of a vehicle, which is the higher value of the two, is the average price a dealer would sell the automobile for.
The market value, on the other hand, is almost always lower than the retail value, and it considers several variables like mileage, the car’s condition, your service history and accident reports.
How Do Insurance Companies Determine Fair Market Value?
Some insurance firms have defined actual capital value as the fair market value of a car or the amount you’d expect to pay if the vehicle was bought from a seller in the current market graph.
The insurance companies define it as the expense to replace a rolled car with a new automobile but minus the depreciation.
How Can One Find the Retail Value of Their Car?
The retail value of a used vehicle is higher than what you’d receive for it as a trade-in or via a private party sale.
To figure out the retail value of your car:
- Get a detailed check-up from a professional mechanic
- Gather your car’s identifying information
- Ensure you get a professional to take an objective look at your vehicle’s cosmetic conditions
- Add 20% to the private party value of your vehicle
What Does Cars Retail Value Mean?
According to insurance terms, car retail market value means that if your vehicle is covered for its retail value and if it’s written off due to a crash, the settlement amount will be determined by the vehicle’s retail value.
If your automobile’s insured for its retail value, it will easier to replace it if it’s damaged or stolen, with a similar make and model.
So, that said, what’s the best insured value for your car?
Well, it all depends on your needs.
When you’re making your decision, make sure that you factor in the amount you still owe on the vehicle, if you want to get the same car make and model, and the costs of your monthly car insurance premiums.
You also have to remember that the higher the insured value, the higher your auto insurance premiums6 will be.