What does daily value mean in car insurance?
The daily value is the amount a car is worth at the time of determining the value. Several factors are used to determine the amount.
Immediately after buying a new car, you are already making a significant reduction in its value. For example, a new car is worth €25,000. As soon as the car is in your name, the car is second-hand. The value may have already dropped to €22,500. You don't buy a car as an investment, but the value of the car can make a big difference when settling a claim.
Is the daily value important in case of damage?
When damage occurs, the daily value can play an important role. Car damage is repaired unless the repair costs exceed the car's current market value. In that case, you will be paid the car's current market value. The car is then totaled. So you benefit from a high current market value.
How do we determine the daily value?
The determination of the daily value is based on the estimated value immediately before the accident. The amount of the daily value is not a science. An expert estimates this amount. This includes consideration of the following value determining factors:
- The catalog value. What was the car worth new?
- Age of the car.
- Make and type. The amount of car depreciation can vary by make and type.
- Mileage. A car with many miles on the odometer has a lower daily value.
- Accessories. Self-added accessories can increase the car's daily value.
- General condition of the car. Did the car have any damage before the accident and how was the car maintained? This can make a big difference in determining the daily value.
There are more factors involved. Even the color of the car can affect the daily value.
Car insurance at new-for-old value
If you have a (reasonably) new car, in the event of a total loss you will not settle for the current market value. After all, you cannot buy a new car for this amount. Insurers offer new-for-old value coverage in car insurance policies. For a certain period of time, you are paid the new-for-old value if the car is totaled. This period varies from 1 to 3 years. There are insurers who no longer pay out the full new-for-old value after the first year. For example, a depreciation of 1.5% per month is applied from the twelfth month. In case of damage after 14 months, €25,000 is not paid out, but 2 x 1.5% = 3% less.
Can I insure my car for its purchase value?
When buying a used car, you can insure the car at its purchase value. In case of a total loss, for a certain period of time, the purchase value of the car is used instead of the current market value. This can be for a period of six months, but 3 years is also possible. Insurers may have set a ceiling, though. For example, the regulation applies up to a purchase value of €50,000.
Does the daily value matter in case of damage?
In case of damage, whether a payment follows depends on the coverage chosen in the car insurance. The WA car insurance only pays for damage caused by your liability. The WA + limited casco and all risk car insurance also offer coverage against certain damages to your own car. However, no more is paid out than the current market value of the car. This is the value of the car for which the vehicle could be sold just before the damage occurred. If the cost of repairs exceeds the car's current market value, it is referred to as a total loss.
Do they sometimes pay out more than the daily value?
In some cases, the new value rather than the daily value is used. This is the case with car insurance policies with the new value rule. In case of damage, these policies are based on the new value instead of the current value. The new value rule applies for a period of one year or even three years. In the event of an accident, this can make a big difference.
For example:
You buy a new car with a list value of €25,000. You choose an all-risk car insurance policy with a new-for-old policy for a period of three years. In the first year, you are involved in a serious accident. The car is technically irreparable and is declared a total loss.
The daily value of your car before the accident was €21,000. Normally, you would be paid this amount. Through your insurance with the new-value rule, you will be paid an amount of €25,000. So with the payout you can buy another new car.
What does the purchase value rule mean?
After buying a used car, you may benefit from purchase value coverage. For example, in the event of a total loss or theft of the car, the purchase value of the car is assumed for the first three years (or less) in the event of damage. Generally, this is higher than the car's current market value.
When comparing car insurance policies, you may want to include the purchase value or new-for-old value policy in your consideration. After all, it can make a big difference in the event of a claim.
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