How to value your car for insurance: market, retail and trade
How do I value my car for insurance?
Insurers usually work from your car's book value, drawn from vehicle-pricing guides such as the TransUnion (Mead & McGrouther) Auto Dealers' Guide. Three figures matter: retail (what a dealer would sell it for), trade (what a dealer would pay you), and market (roughly the average of the two). Most policies insure at market or retail value, though some offer agreed value. Choosing the right basis affects both your premium and the payout you receive after a loss.
Key takeaways
- Insurers value cars using recognised guides like the TransUnion Auto Dealers' Guide.
- Retail is a dealer's selling price; trade is what a dealer pays; market sits between.
- Most policies insure at market or retail value; some offer agreed value.
- A higher insured value usually means a higher premium.
- Extras, low mileage and condition can lift your car's value.
- Review your insured value yearly as the car depreciates.
Why the right value matters
The value your car is insured for drives two things: what you pay each month and what you receive if it is written off or stolen. Get it wrong in either direction and you lose out. Insure for too little and a total-loss payout will not replace your car - you are effectively under-insured. Insure for too much and you pay a needlessly high premium, since insurers will still only pay the car's actual worth at the time of loss, not an inflated figure. Setting a realistic, defensible value from the start avoids both traps and makes any future claim far less likely to end in a dispute over what the car was really worth.
Retail, trade and market value explained
Three values describe the same car, and it helps to know the difference:
- Retail value - roughly what a dealer would sell the car for on their floor; the highest of the three
- Trade value - what a dealer would pay you for it; the lowest, as they need a margin to resell
- Market value - generally the point between retail and trade, often close to their average
When an insurer quotes a value or pays a claim, it is using one of these bases. Knowing which one applies to your policy tells you what to expect at claim time.
Where insurers get the figures
Insurers do not guess. They reference established vehicle-pricing guides, most notably the TransUnion (Mead & McGrouther) Auto Dealers' Guide, which tracks values for makes, models and years across the South African market. From that baseline, they adjust for your specific car - its mileage, overall condition, service history and any factory extras. A well-kept, low-mileage example can be valued above the baseline; a high-mileage or neglected one below it. This is why keeping records matters: your service book, receipts and evidence of low kilometres are the levers you can use to make sure your car is valued fairly rather than as a generic example.
Market value vs retail value vs agreed value
The basis of valuation on your policy is a choice worth understanding:
- Market value cover pays the market figure at the time of loss - cheaper premiums, but a lower payout
- Retail value cover aims to pay closer to the dealer selling price - a higher payout, usually a higher premium
- Agreed value fixes a specific sum upfront, useful for classics or modified cars
There is no single right answer. A car you would struggle to replace at market value might justify retail cover, while a straightforward daily runabout may be fine on market value. Check which basis your quote is using.
How extras, mileage and condition affect value
Two identical models can be worth different amounts, and the details explain why. Below-average mileage for the car's age lifts its value, while very high mileage lowers it. Factory-fitted extras and desirable options can add worth, and non-standard accessories or modifications may need to be declared and specifically insured to be covered at all. Overall condition - bodywork, interior, tyres and mechanical health - feeds into the assessment too. When you set or dispute a value, having documentation for these factors turns a vague argument into a concrete one, helping ensure the car is insured and paid out for what it is genuinely worth.
Reviewing your insured value over time
A car's value is not static - most vehicles depreciate year after year, so a value that was accurate when you took out the policy slowly drifts out of date. If you never revisit it, you can end up paying to insure a figure the car no longer commands, or occasionally find yourself under-insured. It is good practice to review the insured value at each renewal, adjusting it in line with the car's current worth. This keeps your premium fair and your potential payout realistic. When you next review your cover, checking the value basis is worthwhile before you compare quotes.
Frequently asked questions
What is the difference between market and retail value?
How do insurers work out my car's value?
Should I choose market or retail value cover?
What is agreed value cover?
Do I need to update my car's insured value?
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