Understanding amount covered and market value


Insurance jargon can be tricky to navigate. When shopping for car insurance, two common terms can be especially confusing; “amount covered”, sometimes known as agreed value, and “market value”.

These terms refer to the methods of determining your sum insured; that is, the amount you’ll be paid if you make a claim that is accepted. Understanding the difference between them can help you ensure you have the right coverage for your needs.

The option you choose for your policy can impact your premium. You can compare the difference in cost by getting a quote for AAMI Comprehensive Car Insurance now – it’s easy to select one option, check the price, then try the other.

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What is amount covered?

Amount covered, sometimes called the agreed value elsewhere, is a specific amount that you and your insurer – for example, AAMI – agree on. This is the maximum amount we will pay for loss or damage to your car in any one incident and shown on your certificate of insurance, unless we say otherwise in your policy.

With AAMI, you can choose an amount covered when you take out or renew a Comprehensive Car Insurance policy. You can select your chosen amount covered from within a range we offer, which is determined by a few factors. It’s worth mentioning that adjusting the amount covered will also impact your premium, so you can make it work for your circumstances.

Once you’ve chosen an amount covered and bought your policy, you can check your amount covered on your Certificate of Insurance.

What are some of the factors that affect the amount covered value range we offer?

  • Age.
  • Make.
  • Model.
  • Condition.
  • Accessories and modifications.

Keep in mind that your amount covered won’t automatically update if you add accessories or mods during the cover period. Make sure to read the Product Discosure Statement and also review your amount covered from time to time and ensure that it covers exactly what you need it to.

What is market value?

Choosing market value cover means that neither you nor your insurer specifies a dollar figure when you take out or renew your policy. Instead, the amount your insurer will pay in the event of a successful claim is determined by the amount the market would pay for your car at the time of the incident – basically, the amount you could reasonably sell your car for in its current condition, if the incident didn’t occur.

AAMI may use some recognised industry publications to calculate what that amount is. If you choose to insure for the market value, and we agree, those calculations will also include any accessories or mods that are permanently fitted to the vehicle.

It’s important to note that if you choose to insure for market value, you won’t be able to change to amount covered until it’s time to renew your policy.

What may affect market value?

  • Age.
  • Make.
  • Model.
  • Kilometres travelled.
  • The car's condition.

Market value can vary over time, as market trends and economic conditions shift and change. Because of this, there’s no specific value that will be listed on your Certificate of Insurance.

Which option is best?

Deciding between amount covered and market value depends on your individual circumstances and preferences. You may consider these factors:

  • The stability of your car’s value. If you think that value will probably remain stable over time, amount covered may be more suitable. This can be the case for classic or vintage vehicles that may have a unique value.
  • Depreciation. If your car isn’t a classic, and is likely to depreciate in value over time, market value may be more appropriate.
  • Cost. Amount covered and market value cover will have different premiums, so be sure to check that the cover you choose is right for you and your needs.
  • Personal preference. Some people may prefer the certainty of an amount covered, whereas others may appreciate the flexibility of market value cover.

Ultimately, the best option for you is the one that meets your needs and provides you with the peace of mind that comes with knowing your car is covered.

Learn more about Car Insurance

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Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Read the Product Disclosure Statement before buying this insurance. The Target Market Determination is also available.

This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. 

The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.