Calculators & guides
How Much Car Insurance Cover Do You Need? Insured Value Explained
By Sipho Dlamini · 6 min read · Updated 24 June 2026
- Insured value bases
- Retail, market, trade (highest to lowest payout)
- Watch for
- A finance shortfall if you owe more than the car is worth
- Fix the gap
- Shortfall (gap) cover
How much cover you need depends on the insured value basis you pick - retail, market or trade - and whether you owe more on finance than the car is worth, which is where shortfall (gap) cover comes in. Choose the basis that matches your risk, not just the cheapest premium.
If your car is written off or stolen, the insurer pays out based on that value, minus your excess. Pick the wrong basis and you could be left short, especially if you still owe the bank.
This guide explains each value basis and how to size your cover sensibly.
Retail, market and trade value
| Basis | Roughly means | Payout | Premium |
|---|---|---|---|
| Retail | What a dealer would sell it for | Highest | Highest |
| Market | Average of retail and trade | Middle | Middle |
| Trade | What a dealer would pay for it | Lowest | Lowest |
The higher the value basis, the bigger the potential payout, and the higher the premium. Many people insure for retail or market so a write-off leaves them able to replace the car.
Agreed value vs market value
Most South African motor policies pay on market or retail value at the time of loss, using the Auto Dealers' Guide. A few classic or specialist policies offer an agreed value, fixed up front. For ordinary cars, understand which guide value your insurer will use and how it is determined.
The finance shortfall trap
When you buy a car on finance, the amount you owe can be more than the car's insured value for the first couple of years (because cars depreciate fast). If it is written off, the insurer pays the car's value, but you may still owe the bank the difference.
Example:
Still owed to bank R 220 000
Insurer pays (value) R 180 000
-------------------------------
Shortfall you owe R 40 000
Shortfall (gap) cover pays that R40 000 difference so you are not stuck paying for a car you no longer have.
How to size your cover
- Find your car's current retail, market and trade values (most quote tools show them).
- Check what you still owe on finance, if anything.
- If you owe more than the car's value, add shortfall cover.
- Decide your value basis: retail or market if you want to replace like-for-like, trade only if you accept a lower payout for a lower premium.
- Add the extras you actually need: car hire, towing, windscreen.
Don't forget the extras that affect 'enough'
Cover is not only the car's value. Consider:
- Third party liability for damage you cause to others (often the biggest real risk).
- Car hire while yours is being repaired.
- Towing and storage after an accident.
- Cover for accessories, sound systems or a canopy.
Leaving these out can make a cheap policy feel expensive at claim time.
Under-insuring to save money: the catch
Insuring for trade value or understating your car's worth lowers the premium, but it also lowers the payout. If you could not afford to top up the difference to replace the car, you are effectively self-insuring that gap. Match the value basis to what you could actually absorb.
Frequently asked questions
What is the difference between retail and market value?
Retail value is roughly what a dealer would sell the car for - the highest figure. Market value is an average of retail and trade. Trade value is what a dealer would pay for it - the lowest. The higher the basis you insure for, the bigger the payout and the premium.
Which insured value should I choose?
If you want to be able to replace the car after a write-off, retail or market value is safer. Trade value is cheapest but pays the least. If you still owe money on finance, also add shortfall cover so a write-off does not leave you owing the bank.
What is shortfall or gap cover?
Shortfall (gap) cover pays the difference between what you still owe on your car finance and what the insurer pays out if the car is written off or stolen. Without it, a write-off early in a finance deal can leave you owing the bank thousands.
How is my car's value decided at claim time?
Most insurers use a recognised vehicle value guide (the Auto Dealers' Guide) to set retail, market or trade value at the time of loss, then adjust for mileage and condition. The basis you chose on the policy determines which figure they pay.
Do I need cover for the value of the car only?
No. Third party liability - damage you cause to other people's cars or property - is often the bigger financial risk and is built into comprehensive cover. Also weigh car hire, towing and accessory cover when deciding what 'enough' looks like for you.
Will I get the full insured value if my car is stolen?
You get the insured value on your chosen basis, minus any excess and subject to the policy terms. If you under-insured or chose trade value, the payout may not cover replacing the car. Theft claims also carry their own excess.
How much car insurance cover do I really need?
Enough to replace the car (retail or market value), cover what you owe the bank (shortfall cover if you are upside down), and protect you against liability to others. Then add the practical extras like car hire and towing that you would miss at claim time.
