Luca bought his first family car 3 years ago for a purchase price of €30,000 when his first child was born and inevitably needed more space. Due to the natural depreciation process, today his vehicle is insured by his motor insurer for a sum insured of €20,000. Luca is concerned and decides to further protect his financial interest by buying a Market Value Plus insurance policy; also on the market value of €20,000. But how will this protect him exactly?
Let us say that Luca has a very bad accident tomorrow. Don’t worry Luca and his family will be safe, he bought a PSA vehicle after all! Unfortunately, his car may not make it. If declared irreparable, the motor insurance company will write it off, and after further depreciation deductions and the excess payment, the motor insurance policy may end up reimbursing Luca with €17,000. This is definitely not enough to buy another family car which Luca will definitely need, especially with another child on the way.
Market Value Plus guarantees Luca, 30% of the value that it was insured for i.e. €20,000, irrespective of the amount paid by the motor insurer. Luca gets an indemnity of 6000€ with Market Value Plus. This means that Luca is now in the following financial position:
| Motor Insurance Payout
| Market Value Plus Payout
| Total Amount
Luca is now in a better position to buy another vehicle that suits his family needs. Luca is happy.