What market value means in insurance in Australia for car and home is amount insurer pays if total loss based on what car or property would sell for just before loss, based on comparable sales and RedBook, not agreed fixed amount, costing cheaper premium 10% to 20% less than agreed value. Market value in insurance means insurer pays market value at time of loss, which is what willing buyer would pay willing seller just before loss, based on comparable sales, condition, km and demand, for car $18K for 2018 Toyota Corolla 100K km good condition, versus agreed value $20K fixed agreed at policy start. For example, car bought $20K, market value after 2 years $16K, if total loss, market value policy pays $16K, agreed value policy pays $20K if agreed $20K, with market value premium $800 per year versus agreed $900 saving $100 but payout $4K less. For home building, market value rarely used as building insurance uses sum insured rebuild cost $500K, not market value including land $800K. So market value in insurance means payout based on current market value at time of loss $18K for car based on RedBook and sales, cheaper premium $800 versus $900 agreed, but payout lower and may not cover replacement $20K or loan $18K, with agreed value giving certainty $20K fixed payout worth extra $100 premium for newer cars under 5 years.
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