Understanding amount covered and market value
Insurance jargon can be tricky to navigate. When you’re shopping for car insurance, there are two terms that can prove especially confusing. In the process of taking out a policy, you may be asked to choose how you want to insure your car: with an “Amount Covered” or its “Market Value.” So, what does that mean exactly?
These terms refer to how we determine the maximum payout for loss or damage to your car in any one incident, unless we say otherwise in your policy.
Understanding the difference between them helps ensure your cover fits your needs.
What is Amount Covered?
Amount Covered is a set amount, and it’s the maximum we’ll pay for loss or damage to your car. You might also hear some insurers call this an ‘agreed value’. It covers the value of your car, plus any accessories, modifications and GST. When you take out your policy, you can choose this amount from within a range.
Keep in mind that your Amount Covered won’t automatically update if you add accessories or mods to your car (even if they may increase your car’s value). You can increase your amount if you have added modifications or accessories otherwise you will have to wait for your policy renewal.
The Amount Covered is shown on your certificate of insurance.
You can view and update your policy at any time using your AAMI online account.
What is Market Value?
Unlike Amount Covered, Market Value is a variable amount based on our assessment of how much the market would pay for the car at the time of an insured incident.
The Market Value depends on the condition of your car and what it would sell for based on comparable sales in the market. It's important to keep in mind this is not necessarily the highest sale price.
Read the PDS for more info, including any deductions that may apply.
What can affect Market Value?
To work out the Market Value of your car, we may use recognised industry guides and publications that track the prices cars actually sell for. It includes many factors such as the car’s:
Age
Make
Model
Kilometres travelled
General condition
Permanently fitted accessories and modifications
It does not include stamp duty, transfer fees, dealer warranty or delivery costs.
Bear in mind 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.
How do I decide what option suits me?
There are differences in cover and price to weigh up between Amount Covered and Market Value. Ultimately, the best option for you is the one provides you with the most peace of mind on the road.
Our teams are here to help. If you have questions about your cover, get in touch.
Read more:
- Car Insurance renewal prices explained
- Buying a new car? Here’s how it may impact your premium
- What kind of car insurance do I need?
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.