What value is my car insured for?
Insurers typically use one of three values, from highest to lowest:
Retail value
The average amount a dealership would sell your car for.
Market value
The amount you could sell your car for privately.
Trade-in value
The amount a dealership would offer you if you traded it in.
At Naked, cars are insured for retail value; the highest value an insurer would usually pay out if your car is written off or stolen. You can read more about how car value works in our blog on how car depreciation affects your insurance.
What about classic cars?
Classic cars are usually insured for an agreed value. That means you and your insurer agree upfront on what the car is worth, often based on a professional valuation. If the car is written off, that’s the amount insured.
Why does a car lose value over time?
Cars start depreciating as soon as they leave the dealership floor. That’s mainly due to wear and tear, mileage, and the release of newer models. As supply increases and demand shifts, resale values drop, which is why understanding your car’s value matters when choosing insurance.