Agreed Value vs. Market Value Car Insurance

Introduction

For a New Zealand private-car policy, agreed value and market value are not simply labels: they can change the basis used to settle a theft or write-off. The most important document is your current policy schedule, read with the total-loss and valuation clauses in the policy wording.

In our editorial review, we find that the key distinction is straightforward but the outcome is policy-specific. Agreed value is an amount agreed with the insurer and recorded for the policy period; market value is generally the vehicle’s value immediately before the loss or damage. Neither basis is automatically better for every vehicle or every budget.

For broader cover comparisons, see our New Zealand car insurance guide.

What agreed value means

Consumer Protection NZ describes agreed value as the value agreed with the insurer when the policy is taken out and at each renewal. Under an agreed-value policy, the schedule should show the relevant amount. For a total loss, that scheduled amount may be the starting point for settlement under the applicable wording.

“Agreed” does not mean the figure will remain unchanged indefinitely. Insurers may review, adjust or propose a different agreed value at renewal as vehicle values change. Check the renewal schedule rather than assuming last year’s figure still meets your needs.

The final amount paid can also be affected by the policy terms, including applicable excesses, unpaid premium and other conditions. Do not treat the schedule figure alone as a promise that every total-loss claim will result in that exact amount.

What market value means

Market value is generally the vehicle’s value immediately before it was damaged or lost. The assessment method is defined by the insurer’s wording. For example, Tower says its assessment considers comparable vehicles and factors such as make, model, kilometres, year and condition.

Market value can move over time. It is not inherently lower or higher than an agreed value: the relationship depends on the particular vehicle, the current market and the amount recorded in the schedule. This basis is particularly important when a vehicle is stolen or is a total loss; the wording determines how the insurer assesses and settles the claim.

Agreed value vs market value: comparison checklist

Why the policy schedule and wording both matter

Do not rely on a product label alone. Insurers can use different terminology and provide different options. AMI’s current wording, for example, states that the schedule identifies whether cover is agreed value or market value. Its total-loss provisions illustrate why the wording matters: for market-value cover, settlement may be market value or the sum insured, whichever is lower, subject to that policy’s terms. This is an insurer example, not a universal rule.

When we compare policy information, we look beyond the valuation label to the clauses that answer these questions:

• Is your policy recorded as agreed value or market value on the current schedule?
• What does the wording call a total loss, and what settlement options does it give the insurer?
• For market value, what valuation definition and evidence or assessment process applies?
• Does a sum insured operate as a cap or otherwise affect payment?
• Which excesses, unpaid premiums, exclusions and conditions can affect the amount ultimately paid?
• Are modifications and accessories accurately disclosed, and are they covered under the schedule and wording?

Modifications or accessories should never be assumed to be included merely because a vehicle has an agreed value. Disclose them and check the schedule and wording for the cover that actually applies.

Choosing a value basis at purchase or renewal

Start with the financial risk you are trying to manage if the vehicle cannot be repaired or is stolen. An agreed amount may suit a reader who wants clarity about the scheduled basis for the coming policy period. A market-value basis may suit a reader who is comfortable with a valuation immediately before the loss, using the insurer’s stated method. These are decision factors, not universal recommendations.

Then compare like for like. Ask the insurer or adviser which value basis is available for the vehicle and cover type, and obtain a current quote. Avoid assuming either option will always cost more or less; pricing, availability, eligibility and policy terms vary.

What to Do Next

1. Find your current schedule and identify the value basis and amount, if one is shown.
2. Read the total-loss, theft, valuation, excess and settlement provisions in the current wording.
3. At renewal, compare the proposed agreed value or consider whether market-value cover remains appropriate. ICNZ notes that second-hand vehicle values can fluctuate.
4. Update the insurer about changes that may be relevant, including modifications and accessories, and retain supporting information where useful.
5. If the wording or renewal figure is unclear, ask the insurer to explain how it applies to your policy before renewing or changing cover.

This article provides general information, not personalised insurance or financial advice. Your schedule, wording, eligibility and claim circumstances determine the cover available.

References

• Consumer Protection NZ — Car insurance
• Insurance Council of New Zealand — Motor Insurance: What You Need to Know
• Insurance Council of New Zealand — Renewing your Private Motor Vehicle Insurance Policy
• AMI Insurance — Car Insurance Policy Wording
• AMI Insurance — Is My Car Insured For Agreed Value Or Market Value?
• Tower Insurance — Comprehensive Car Insurance
• Tower Insurance — Tower Translates

Author / Editorial Team

This content was produced by Insurspy’s internal editorial and research team. In our editorial review, we compare public policy information and prioritise authoritative New Zealand consumer, industry and insurer sources. We review articles for accuracy and practical usefulness, but readers should always check their current policy schedule and wording.