Car Value

Key takeaways

• The more valuable your car is, the more you’re likely to have to pay for insurance

• Insurers don't refund the price paid when cars are written off, they pay its market value

• You can add GAP insurance to your policy to get the full amount you paid back

Does your car value affect insurance costs?

Yes. In general, the more valuable your car is, the more you’ll pay for insurance.

That's because pricier cars (and their parts) are more expensive to repair or replace. They’re also more likely to be stolen.

How do you work out the value of your car?

The value of your car is not the same as the price you originally paid for it. The value is how much you would get for it if you were to sell it today.

You can work out the value of your car by visiting a car valuation website and entering your car’s registration number. Alternatively, you could carry out some online research by visiting websites like Autotrader and eBay, where you can search for your car's make and see how much similar models are selling for.

The market value of a car is usually much lower than the original price. This is because of depreciation. Depreciation is when an asset loses value over time due to things like wear and tear.

How do insurance companies decide on the value of your car?

If your car is written off, insurers will only pay out the current market value of your car. They will have their own research methods to come to this figure.

If you think your insurer has undervalued your car, you can try to negotiate with them. Collecting evidence, such as the price cars like yours are selling for elsewhere, will help your case.

If you and your insurer can't come to a figure you are happy with, you can complain to the UK's Financial Ombudsman, who will investigate and rule on whether your insurer's valuation is fair.

What is GAP insurance?

Guaranteed Asset Protection (GAP) insurance will cover the difference between the original price you paid for your car and its current market value. It acts as a safety net if your car is stolen or written off and your insurance provider pays out less than you initially paid for the car.

It’s available as an optional extra when you buy car insurance.

Does vehicle value affect what insurance group your car is in?

Yes, your car’s value affects which insurance group it’s in. Insurers usually factor in your car's insurance group when calculating your premiums. Generally, the higher the insurance group, the more expensive it’ll be to insure.

Insurance groups are set by the Association of British Insurers (ABI). They categorises every make and model of car into 50 different groups.

The grouping system is based on a variety of factors, including:

• price when new

• repair costs

• performance

• safety and security features

• price of replacement parts

• the relative risk of each car

If you want to find out which insurance group your car is in, enter your car registration number into our insurance group checker.

Will switching to a more expensive car affect your premiums?

Yes. High-end, higher-powered cars will cost more to insure. That’s because they’re more expensive to repair and replace.

If you switch to a more expensive car midway through your insurance policy you can transfer your policy to the new car but your insurer will probably charge you extra.

You also have the option to compare policies and find a cheaper deal. Make sure you factor in any cancellation fees you may need to pay when deciding whether switching insurance mid-policy is worth it.

What other factors affect insurance costs?

The factors that impact your insurance premiums include:

• Your age

• Your job

• Your driving record

• Expected annual mileage

• Where you live

• Where you park your car

• How long you’ve been driving

• Type of car

• Your no-claims discount

Wondering why car insurance premiums are so high? Read our guide to why car insurance is so expensive.