Key takeaways
- Agreed value fixes your write-off payout; market value may be lower than you expect after depreciation.
- A higher excess saves premium but only makes sense if you can afford it in an emergency.
- Optional extras like hire car cover are worth it only if you rely on your vehicle daily.
The most impactful decisions in your car insurance policy are not always about cover level — they are about excess, valuation method, and which optional extras you actually need. Here is how to right-size your policy without overpaying.
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Agreed value vs market value
Agreed value fixes the payout if your car is written off at an amount you negotiate with the insurer at policy start — it is a separate choice from market value, not a synonym. Market value means the insurer assesses what the car was worth at claim time, which may be less after depreciation. Agreed value costs slightly more annually but eliminates uncertainty in a total loss.
- Agreed value — certainty at claim time; better for newer or well-maintained vehicles
- Market value — lower premium; payout may surprise you after depreciation
- Review agreed value annually — an outdated figure can leave a gap at claim time
Setting the right excess
Excess is the most direct lever on your annual premium. A higher excess usually reduces the premium, though the saving varies by vehicle and insurer. Young drivers often attract an additional age excess on top of the basic excess — read the policy schedule carefully.
Important
Optional extras worth evaluating
Optional extras deserve evaluation, not automatic acceptance or rejection. Each adds cost but can provide real value depending on how you use your vehicle.
- Hire car after accident — valuable if you commute or rely on the car for work
- Choice of repairer — important for warranty vehicles or trusted workshops
- Windscreen-only cover — worth considering in hail-prone areas; some policies preserve no-claim discount
- New-for-old replacement — often included for cars under two years; confirm in the PDS
- No-claim discount protection — preserves your discount after one fault claim per period
Modifications and disclosures
Non-factory modifications — lift kits, engine upgrades, aftermarket rims — must be disclosed. Undisclosed modifications can void a claim or reduce the payout. Some insurers exclude certain modification types entirely.
General information only — not personal financial advice. Consider your own circumstances and read the Product Disclosure Statement (PDS) before purchasing any policy. Moneyhero may earn referral fees from some providers when you switch through us; this does not change how results are ordered. How we compare
Frequently asked questions
Excess, agreed value, and extras — practical answers about right-sizing your cover.
What is the difference between agreed value and market value at claim time?
Agreed value means the insurer pays the amount stated in your policy schedule if the car is written off. Market value means they assess what the car was worth at the date of the incident. Agreed value provides certainty; market value may leave a gap.
Should I always choose the highest excess to reduce my premium?
Only if you have the savings to cover that excess in a genuine emergency. A $1,000–$1,500 excess is often a sensible balance between premium savings and financial accessibility.
Do modifications need to be declared to my insurer?
Yes. Non-factory modifications must be disclosed. Undisclosed modifications can void a claim. Check the PDS for excluded modification types.
What happens to my no-claim discount if I make a claim?
Most insurers reduce your no-claim discount after a fault claim. Some policies include no-claim discount protection as an optional add-on that preserves the discount after one claim per period.