Time certainly flies and not only when you are having fun. We are already into the second month of 2014 and like it or not, your vehicle is already a year older. Naturally, the implications are – the value of your vehicle has already dropped. That is certainly not ideal however, do a little damage control and ensure that you insure your vehicle at the correct value.
Hypothetically – why would you insure a vehicle for R150 000 when it is only valued at R100 000? It definitely doesn’t make sense to do so as in the event of it being written-off, the insurance company will only pay R100 000. In essence you would have definitely lost a bit of money because of the error in insuring your car at a higher amount.
For the sake of fairness and sensibility as the value decreases the risk should decrease as well.
Vehicle insurance is insured either on retail value or market value, so you will need to know how much you are insured for. Retail value is the value a dealer should sell the vehicle for. You can obtain this figure or value from a car dealer.
Trade-in value refers to the value that the dealer would give you or offer you for your existing vehicle. Market value is the difference between retail value and trade-in value.
Cars younger than three years are normally insured at retail value and older cars can be insured at market value. Yearly, it is wise to review your vehicle insurance and readjust your vehicle’s insured value with your broker. This is a simple and quick process and could possibly save you money.
Please feel free to contact me should to want to review and readjust your current vehicle insurance.
By Rachel Hariparsad
