Whenever you are renewing your car insurance, when reviewing the quotation for a comprehensive coverage, you should pay attention to the proposed sum insured. The insurance sum insured is usually based on your vehicle age, model and variant, so the coverage amount may differ. Make sure that the sum coverage amount is reasonably close to the value of your vehicle.
Pay special attention to see if the sum insured is based on Indemnity Value, or common refer to as Market value or Agreed Value. If no indication is provided, look if there is mentioned of endorsement 87. Endorsement 87 refers to Agreed Value clause, if there is no such indication, then it is mostly to be insured under indemnity value (Market Value).
So, what is Agreed Value vs Market Value?
Agreed Value and Market Value will be relevant when there is an total loss or theft claim. In the event of a total loss, or theft, the amount your insurance company will compensate you will depend if it was insured under Agreed Value or Market Value.
If your insurance is based on Agreed Value, then in the event of a total loss claim, the insurance company will pay you the amount stated agreed. example, if your Honda Civic is insured based on RM120,000 agreed value, then the insurance company will pay you RM120K with no question asked.
But if your insurance is based on Market Value, then in the event of a total loss claim, the insurance company will pay you the amount based on the market value of a similar model as yours. So, you may have insured for RM120K, but at the time of loss, a similar model of your vehicle is now offering for RM100K. That implies that the market value of your car at time of loss is only worth RM100k, so the insurance company will settle you with RM100k, as with this amount of money, you can get yourself a similar vehicle.
So, when comparing the insurance premium, stay attention if they are based on Agreed Value or Market Value. It is also better to get insured based on Agreed Value.