Does the value of your car affect your insurance?

Does the Value of Your Car Really Affect Your Insurance?

Many drivers think that a more expensive car always means higher insurance.

That’s partly true - but there’s more to it.

Your car’s value does affect your insurance premium, but it’s only one of several things insurers look at. Cost to repair, likelihood of theft, and how you use your car all play a part.

In this article, we’ll explain how car value fits into insurance pricing, how insurers calculate it, and what else influences your premium.

Key points

• Car value is one factor among many that affect insurance costs.
• High-value cars often cost more to insure because repairs and replacements are pricier.
• Low-value cars aren’t always cheaper - theft rates and safety also matter.
• Insurers use market data to decide what your car is worth, not what you paid for it.

How Car Value Affects Insurance Premiums

Insurers price your policy around the cost of risk.

If a car is worth more, it generally costs more to repair or replace, so the risk - and the premium goes up.

But cheaper doesn’t always mean safer.

Some low-cost cars have high theft rates or limited safety technology, which can also raise premiums.

How Do Insurers Work Out the Value of Your Car?

Insurers use trade guides such as CAP (Current Auto Pricing) and Glass’s Guide, along with current market data, to estimate your car’s value.

CAP (Current Auto Pricing) tracks what cars are actually selling for across the UK, while Glass’s Guide lists up-to-date vehicle prices used by dealers, finance companies, and insurers. Together, they help insurers work out a fair market value for your car.

They also consider:

• Age, mileage, and general condition
• Factory or aftermarket modifications
• Service and ownership history

There’s a difference between:

• Declared value – what you think your car is worth when you take out the policy.
• Market value – what your car is worth at the time of a claim.

If your car is written off, the payout is usually based on market value, not purchase price.
You can get a rough estimate using tools like AutoTraders’ valuation.

Other Factors That Affect Car Insurance Costs

Your car’s value matters, but it’s only one factor that can impact your premium.
  Insurers also consider:

• Your age and experience – learn more about young driver insurance.
• Where you live – local theft and accident rates affect price.
• Annual mileage – see how mileage affects premiums. 
• Driving history – claims and convictions raise risk.
• Job title – read how occupation affects insurance. 
• Car use – social, commuting, or business driving all differ.
   

For more on managing everyday motoring costs, read How to cut down on your car expenses.

What You Drive Matters-But So Does How and Where

Your car’s value plays a role, but it doesn’t define your premium.
  A high-value car can still attract a moderate price if other risks are low.

Insurers look at the full picture - the driver, the car, and the way it’s used - to keep pricing balanced.

Ready to see how your car’s value affects your premium? Get a quote today 

FAQs

Can I insure my car for more than its market value?

No. Insurers base payouts on your car’s market value at the time of a claim, not its original cost.

Will switching to a cheaper car lower my premium?

Not always. Some lower-priced cars have higher claim or theft rates, so the difference may be small.

Does depreciation affect my insurance payout after a write-off?

Yes. Depreciation lowers your car’s market value, and payouts are based on that figure. Car depreciation is the reduction in a car's value over time and with use, representing the difference between what you paid for it and its resale or trade-in value.