Retail Value
When dealing with car insurance there are different terms that can be used to determine the value of your car. The value of your car has an impact on the monthly insurance premium and determines what you will receive in the case of a total loss. It is therefore very important to make sure that your car is insured for the correct value.While most car insurance companies use market value to determine insurance premiums, some companies may also use retail value. The retail value is higher than the market value.
The difference between the retail and market values can be described as follows: Market Value is the price at which a car can be sold privately (out of hand) at any particular time. The Retail Value is the price one would pay for the same car if you were buying it through a car dealer.
The value of a brand new car depreciates very fast, some up to 40% in the first year; insurance companies therefore do not insure cars at replacement value (new for old.) In the instances where you are able to insure your car at retail value, instead of market value, you will pay a higher premium. Some specialist insurance products such as off-road (4×4), vintage or collectable car insurance use retail value to determine premiums.