The first step in choosing the best vehicle insurance policy is to evaluate your needs, but it is also very important to insure it for
the correct value. Many vehicle owners don't understand that there are three different amounts for which a car can be insured - market,
Determining the amount to insure for new vehicle, is usually based on the retail value or purchase value. Vehicles start depreciating in
value however, from the moment they are driven off the showroom floor, so it is not a good idea to simply leave it at that. The trade price
is about R10 000 less than retail and in most cases is a sensible option if you take the depreciation into account. For a used vehicle,
market value which is the average of the vehicle's trade and retail values is often the best bet and this can be determined by looking up
current prices for similar models in one of the car magazines. Choosing the market value can be the wrong decision if your vehicle has high
mileage since you are then unlikely to get paid out for the market related value because of the effect of higher mileage.
It is important to avoid insuring your vehicle below the actual value, just to avoid high insurance premiums. If you need to claim you
might find yourself significantly short on the amount that is paid out by your insurance company, compared to the actual amount it will cost
to replace your vehicle.
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