Just spoken to a gentleman who was asking about market value.
He didn’t know what it was but his friend had said to make sure that anything he bought was not affected by market value!
Market value in the board sense means how much the equivalent product, item or service is normally sold for at that time.
So the market value for a ticket for a concert is say £100. If they sell out and demand is high the market value may mean that the price increases to say £120.
That said when it comes to gap insurance market value can mean lots of things and no matter which insurance company or which gap insurance supplier some where in their terms and condition there will be a mention of market value.
So what does it mean?
More importantly how can market value affect you and any gap insurance claim you make.
Market value can be used in two ways in the world of gap insurance. One is when talking about or valuing your vehicle on the day it is written off and the other is with reference to the physical price you paid.
OK lets look at the easy one first – Market value in relation to the price you paid. Some gap insurance companies will set the price you paid against a market value. In an ideal world no-one would ever have to pay over the market value for any vehicle but occasionally to but the exact model, exact colour and specification you may have to pay slightly more. What this means is that if the guide price they use says that the vehicle you bought should be say £20,000 that will be the price that you protect. Some allow an additional percentage but not all.
Normally this is not a problem as motor sales is very competitive and prices are usually kept trimmed to the bone but remember that the invoice price may include extras such as paint protection and other accessories so very quickly you can move far away from the market value guide prices.
Some gap insurance suppliers simply allow that price you paid to be the price you protect with no reference to market value. Again just be careful and make sure it covers paint protections and other extras as other wise even though there is no market value clause the cost of these items will be deducted from any settlement.
Ok now comes the sticky one.
Market value when it comes to the valuation of your vehicle on the day it is written off.
This is where you will need to do some home work. So we know that your insurance company will offer you the market value for your vehicle but you need to know which market value. Is it a Glass’s Parker’s or what ever guide price or is it a something else. Motor insurance is very expensive and it is easy to simply opt for the cheapest price but before you buy you need to know how they calculate settlements.
Is their market value a trade price?
Is there market value a percentage of a guide price and if so whose?
I saw a post on a forum where a gentleman had his vehicle written off and his gap insurance company where offering thousands less than his own insurance company. No wait it was not the gap insurance companies fault as they where offering glass’s guide retail. So in theory the amount that he would need to buy another vehicle on a like for like basis. His own motor insurance company where offering thousands less saying that they had found one on a very well known car buying website for that price. When he looked it to it his own insurance company terms and conditions where limited to the trade price only.
He has since been back to his insurance company and the gap has closed some what but he is still left out of pocket
So in summary check how your insurance class the market value before you buy any motor insurance or gap insurance policy from anywhere.