How car insurance companies determine the 'market' value of a car is an increasingly disputed topic, with the insurance industry watchdog receiving thousands of complaints about the matter in a single year.
The Australian Financial Complaints Authority (AFCA) said it received 2426 complaints related to market value from July 2025 to March 2026, making it the second biggest source of car insurance complaints, second only to delays in claim handling.
What's the difference between agreed value and market value?
When insuring a car, customers have the choice between insuring it for 'market value' or 'agreed value', which will determine the payout you get if your car is deemed a write-off.
Agreed value is a predetermined amount to be paid out if the car is written off, regardless of its age or condition, locked in when the policy starts or renews.
Meanwhile, 'market value' is a variable amount determined by the insurer at the time of the claim and based on the vehicle's age, condition and the prices for comparable cars on the used market. Many people opt to insure for market value, as it typically means a lower premium.
How is market value determined?
According to the Insurance Council of Australia: "Insurers typically use industry pricing guides (for example, RedBook, Glass’s Guide, AutoGrab) alongside recently sold prices for comparable vehicles. They’ll factor in the car’s age, condition, location and mileage".
However, this is not a precise process and can result in disagreements.
"Differences between an insurer’s assessment and an owner’s expectations do not always indicate misconduct," an AFCA spokesperson told Drive.
"Market value is not an exact science, and disagreements often arise where a consumer’s expectations differ from the market information relied on by the insurer, such as published industry guides, comparable sales data, or expert assessments."
According to the AFCA, some of the issues that commonly cause disputes include insurers using "limited or outdated market evidence", without considering comparable vehicles available at the time of loss, or "comparable vehicles that are not genuinely comparable (for example, different model variants)".
It said complaints also arose over a "lack of transparency" about how market value was calculated, an unwillingness to explain how the value was calculated, and dismissal of relevant evidence provided by the consumer.
The AFCA recommends that consumers who believe they have been misled by their insurer should collect information such as "current advertisements for similar vehicles, assessor reports or independent valuations".
"If a consumer is unhappy with the outcome, they can raise this with the insurer and can use the insurer’s internal dispute resolution process to try and resolve it directly. The insurer has 30 days to try to resolve the complaint. If the consumer is not happy with the outcome, they can complain to the AFCA for free," the AFCA spokesperson explained.
Social media site Reddit is rife with tales of car owners querying insurer valuations, with varied success.
Late last year, Reddit user ForzaMinardi detailed their experience of making a claim for their stolen BMW 328 M Sport – saying they disputed the insurer's initial valuation and ended up securing a 40 per cent increase in the market value.
"They offered me a paltry $20K. I paid $32K for it ... I declined the $20K offer on the basis of it being unrealistically low if I were to replace the car," the post read.
"I complained to the AFCA. Shortly afterwards, the insurer emailed saying they were standing by their value but would give a $2500 ex gratia payment. I hadn't responded, but today I got another email saying 'upon further investigation' they'd revised the value upward by 40 per cent and would stand by the additional $2500 ex gratia payment.
"My advice – never accept an insurer's first offer," they added.
Finally, the Insurance Council of Australia urged consumers to also be aware of other factors that might affect their final insurance payout, including "any applicable policy excess deducted, any outstanding premium payments and any outstanding finance payments".
Susannah Guthrie has been a journalist for over a decade, covering everything from world news to fashion, entertainment, health and now cars. Having previously worked across titles like The New Daily, Elle, Harper's Bazaar, People Magazine and Cosmopolitan, Susannah now relishes testing family cars with the help of her husband and three-year-old son.
