How much car insurance cover do I need?

Choosing the correct insurance policy to suit your needs is the first step in insuring your car, but the next is to ensure that it is insured for the correct value.

Many motorists suffer financial loss because their cars are not adequately insured. There are three different values for which a car can be insured – market, retail or trade. However, there are pros and cons to each and it is essential to understand what they are.

For new cars, determining the amount to insure is usually based on the purchase value or retail value.

For a used car or a car that is more than two years old, market value, which is the average of the car’s trade and retail values, is often the best bet and this can be determined by looking up current prices for similar models for sale in the newspaper or in one of the car magazines.

The trade value is the amount which a dealer would offer you on a trade-in. This is usually the lowest value.

Motorists must, at all costs, avoid insuring their car below the actual value in an effort to save on insurance premiums.

If you have to make a claim, you could then find yourself significantly short on the amount that your insurance pays out compared to the actual amount it will cost to replace or repair your car.

Please note: This document does not replace the terms and conditions of the customer’s insurance policy. Please consult the terms and conditions of the relevant insurer. The customer is obliged at all times to provide true and accurate information to the broker and the insurer, and needs to update this information on a regular basis.