​​​But first, what is the actual difference? Let’s break it down:
 

🔍 Market Value Insurance

Definition: A market value policy pays out the current market value of your vehicle at the time of the claim (usually in the event of a total loss or theft). This value is determined by what similar vehicles are being sold for in the open market.
 

✅ Pros:

• Lower premiums — because the insurer takes on less financial risk.

• Suitable for daily drivers or vehicles with high depreciation.

❌ Cons:

• Payout may be lower than expected — especially if the car has appreciated or has sentimental/custom value.

• Insurers may debate the value at claim time, using basic value guides (e.g. RedBook, Glass’s) that may not reflect niche or enthusiast market prices.

Example:

You insure your 2012 BMW M3 sedan under a market value policy. If you make a claim and it's written off in 2025, the insurer checks what similar cars are selling for today. If it is determined than an average car is valued at $40,000, that's what they’ll pay — regardless of what you paid for it, how low the mileage is, how much you invested in modifications, or how much you’ve looked after the car.

 

These two cars below might look the same, however one has 250,000km and considerable wear and tear inside. The other has low mileage and is immaculate inside and out. Should they both be considered the same value? That is what market value can mean when it comes time to make a claim. 

 

 

 

 

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🔍Agreed Value Insurance

Definition: With agreed value cover, you and the insurer mutually agree on a specific value for the vehicle at the start of the policy. That is the amount you will receive if the vehicle is declared a total loss, no depreciation or debate involved, providing that is what the policy stated and is agreed at.
 

✅ Pros:

• Guaranteed payout amount — you know in advance what you’ll get if you make a claim, and often you can set your perceived value.

• Ideal for classic, collectible, rare, or modified vehicles whose market value is difficult to define or can fluctuate.

• Provides better financial certainty for restoration or replacement.

❌ Cons:

• Higher premium costs — you’re paying more for a fixed payout value.

• Insurer might require proof of value: appraisal, photos, recent sale examples, or a specialist valuation (which is exactly what VIP Automotive Solutions can provide).
   

Example:

You own a fully restored 1967 Ford Mustang GT Fastback. You and your insurer agree to insure it for $120,000 based on an independent valuation provided by VIP Automotive Solutions. If the car is stolen or written off in an accident, you receive $120,000 — regardless of recent auction sales or other cars available for sale on the market for much less.

 

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Which Should You Choose?
 

• Choose Market Value if:
  Your car is a regular daily driver, a general depreciating vehicle and you’re looking to keep premium costs low.

• Choose Agreed Value if:
  Your car has collector value, is an excellent high value example, has significant modifications, or a fluctuating market value — and you want guaranteed protection.
   

Agreed Value Insurance may be a little more expensive, but for owners of high value, modified, or custom cars, it offers peace of mind and coverage for the high amounts they have spent building their dream car. And it isn’t just for classic cars or modified cars. If you own a modified or heavily upgraded 4x4 or SUV, then an Agreed Value Insurance Policy might be worth considering.
 

Lets say you’ve got a 2022 Ford Ranger Wildrak which is in pretty good condition, and has a market value of approximately $50,000. However, you’ve modified it for touring and adventure, and it has all the goodies. Custom bulbar with LED lightbars and spotlights, snorkel, dual battery system, big beadlock rims with offroad tyres, a custom canopy in the rear with a pullout camping kitchen, electric fridge, draw system, suspension modifications with GVM upgrade, rooftop tent, pull out ostrich arm awning, you name it, it has it. And all up, the modifications have cost you another $50,000 on top!

 

 

 

 

 

 

 

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An insurer is unlikely to agree to insure the car for $100,000 (which is the $50,000 market value, plus the $50,000 worth of accessories and upgrades) however, if you can provide an independent valuation showing the car to be valued at approx. $90,000, they are likely to agree to that, and give you the cover you’re looking for.
 

If you’re not sure about what value you should insure your car for, or you need an independent valuation performed, contact VIP Automotive Solutions on 1300 852 173 today and ask us how we can assist!