What is 'market value' in relation to motor insurance?

Market value in relation to motor insurance refers to the current value of a vehicle based on its condition and the prices of similar vehicles in the market. This concept takes into account various factors such as the make, model, age, mileage, and overall condition of the vehicle, as well as how similar vehicles are priced in the relevant market. By assessing these elements, insurers can determine a fair, realistic value that reflects what the vehicle could be sold for in a competitive market.

While the expected resale value of the vehicle might align somewhat with market value, it does not encompass the full range of considerations that define market value itself, which includes current conditions and comparator pricing. The idea of a fixed value set by the insurer is not characteristic of market value, as it lacks the flexibility and responsiveness to market dynamics. Similarly, the insurance amount guaranteed by the policy may not accurately represent the true market value of the vehicle, as it could be a predetermined figure that does not consider current market conditions.