What is Car Sum Insured: Market Value & Agreed Value?

Key points

  1. What is Sum Insured?
  2. The difference between Market Value and Agreed Value?
  3. Is Market Value better than Agreed Value?
  4. Can you insure your car below the market value?

When you renew your car insurance, you might notice these words sum insured, agreed value and market value. But did you know the meaning of these important terms and have you decided on the sum insured for your car? Thus, if you are buying comprehensive insurance, these terms are important because whatever your choice is will impact the amount of the insurance payout should you file a claim for theft or total loss.

But don’t worry, we will help you get through each term and make sure you have a better understanding and be more confident when choosing the best insurance policy for your vehicle in the future.

What is Sum Insured?

Sum insured to put it simply is the amount that you want to insure for your vehicle and usually it is advisable and to be safe if you can insure your car at its current market value. Not just that, the sum insured must not be insured below the market value as if you insured it below the market value, you will need to bear the difference as the sum insured can also be reduced every year.

In Malaysia, there are two types of sum insured that you can choose for your car. The insured amount of your car can be chosen either according to the market value or the agreed value.

The difference between Market Value and Agreed Value?

Market Value is another way around which is to the current calculated worth of your car. If you choose the market value, your car is covered for what it is currently worth in the market. In which, if you decide to take market value, then if anything happens to your car and you submit a claim for total loss or theft, the insurer will assess your claims based on the current market value of your vehicle at the time of loss.

For example, when you insure your car at RM 80,000 based on the market value, and you need to file a claim due to theft or accident , the payout that you will receive from your insurer might be lesser than what you had insured due to the depreciated value of your car. Due to that, the payout will be based on your car worth during the time of claim.

Agreed Value refers to the value agreed by both the insurer and policyholder at the time of insurance renewal. If you decide to choose the agreed value to sum insured on your car, your insurer company will give you the payout according to the agreed value you had chosen. The best thing about agreed value is, the payout is not affected by depreciation unlike market value.

For example, let’s say you chose to insure your car at RM 80,000 based on the agreed value, if something happened to your car and you file a total loss or theft claim in the future, your insurer company will pay the claim based on your agreed value of RM 80,000. The best thing is, the payout will not change even though your car is worth less during the claim.

Is Market Value and Agreed Value better?

Either market value or agreed value is better totally depending on your preferences , what you want and how you want to sum insured your car. Before making any decision, make sure to really understand the risk and make a comparison between both policies as well as different insurers so you can get the better choice.

If you decide to take market value, you must remember that the payout that you are going to receive after you file a claim on your car can be less than the sum insured due to vehicle market value depreciation even though the premium is slightly cheaper than agreed value (depending on which insurer you are choosing). However, it is a great choice to choose market value if your car is quite old, more than 15 years old and debt-free.

However, if you decide to take the agreed value, the premium you must pay to the insurer is slightly expensive(depending on which insurer you are choosing). But, the best part is even though you need to pay the slightly expensive premium, if your car is involved in an accident or theft and you decide to file a claim from your insurer company, the payout you will get from your insurer is the same as the sum insured regardless of any depreciated value.

Bear in mind that, you should also consider several factors before deciding whether you want to insure your car at the market value or agreed value and the factors you should consider is how you value your car in relation to the market, how much you are willing to spend on premiums and last but not least the age of your car. These factors are important and give you the right decision to make a decision.

Can you insure your car below the Market Value?

If you are thinking of sum insured your car, it is important to be aware that not all insurers will allow you to sum insured your car below the market value. It is therefore recommended that you insure your car for at least its market value, in order to ensure you have adequate cover in the event of an accident or theft.

For example, let’s say if your car market value is currently RM 50,000 and you decide to insure your car for RM 25,000, we can consider it as below the market value. Some of the insurer companies might not allow this as your car in the situation where under insured. If your insurer company allows it, you need to remember that the compensation that you are going to receive after you file a claim or theft or accident will be lower than the market value.


Even though now you already get the big picture of market value and agreed value, it is advisable if you can shop around and talk with the insurers representative regarding this before deciding on one. Anything that you decide on will make a huge difference for your future. Read all the terms and conditions and think carefully before anything. Either which one you should choose between market value or agreed value, both have their own benefits.

If you don’t know where to find the best car insurance in town, do visit us here and you will get your quotes within than 1 minute. Take your time and shop around that based on your needs.

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