Car Insurance Before You Buy: Agreed Value, Excess and Questions to Ask

The purchase price is only one part of what a car will cost you.

Insurance can change the monthly or annual budget more than many first-time buyers expect. Two cars with similar prices can produce very different insurance quotes based on their value, model, drivers, location, usage and where the vehicle is kept overnight.

That makes checking car insurance before buying a car a smart part of comparing vehicles, rather than something to leave until collection day.

A quote can help you see what the car may really cost to own. It can also reveal the excess you would face after a claim, how your car would be valued after a total loss and whether any drivers or modifications create extra conditions.

For first-time and value-conscious buyers, those details can make one vehicle fit the household budget better than another.

Key Takeaways

• Get insurance quotes for your shortlisted cars before committing. Premiums can differ based on the vehicle, driver, use and location.
• Compare agreed value and market value carefully. They use different methods to set a payout if an insured car is written off or stolen and not recovered.
• Look beyond the premium. Your car insurance excess, exclusions and extra driver excesses can change what you pay after an incident.
• Young and inexperienced drivers should check every applicable excess. More than one excess may apply to a single claim under some policies.
• Add insurance to your complete car budget. Compare the car price, registration, fuel, servicing, finance repayments and insurance before deciding what feels affordable.

Insurance Terms That Change Your Real Cost

It is easy to compare policies by annual premium alone. A cheaper premium does not always mean a lower cost when a claim occurs.

Start with five terms.

Premium

Your premium is the amount charged for your policy.

Insurers may take account of factors such as:

• the type and value of the vehicle
• who drives it
• how often it is driven
• where you live
• where the vehicle is parked
• the type of cover selected
• your chosen excess

These factors explain why your quote for one vehicle may differ from a quote for another model at a similar purchase price.

Excess

An excess is the amount you may need to contribute when making a claim.

Some insurers let you choose a higher basic excess in return for a lower premium. That can reduce the upfront insurance cost, but it leaves you with a larger amount to fund if you claim.

Inclusions

Inclusions are events, losses or benefits covered by the policy.

Depending on the insurer and policy, these might include cover for theft, collision damage, storm damage, towing, hire cars or certain personal items.

Never assume two comprehensive policies provide identical cover.

Exclusions

An exclusion is something the policy does not cover.

Policies can set conditions around drivers, vehicle use, roadworthiness, modifications and particular events. Claims may face problems when the event falls outside the policy terms, an unauthorised driver was using the vehicle or the vehicle was not registered or roadworthy.

Product Disclosure Statement

The Product Disclosure Statement, or PDS, sets out the product's main features, benefits, risks and other policy information.

Use the quote to compare price. Use the PDS to check what you are actually buying.

Buyer tip: Once you have two or three vehicles on your shortlist, request an insurance quote for each using the same driver, address, annual kilometres and cover preferences. You will get a clearer comparison of their likely ownership costs.

Agreed Value Versus Market Value

One of the bigger decisions in comprehensive cover is how the insurer values your car.

The terms can look similar at first, but they operate differently.

What is agreed value?

Under an agreed value policy, you and the insurer have a set insured value for the vehicle for the policy period, subject to the policy terms.

This can give you more certainty about the insured amount shown on the policy schedule.

What is market value?

Market value is based on what the insurer assesses the vehicle to be worth at the relevant time, using factors such as its make, model and condition.

The amount is not necessarily the price you originally paid for the vehicle.

Agreed value vs market value car insurance

Feature	Agreed Value	Market Value
Vehicle value	Set amount shown in the policy	Assessed around the time of the claim
Certainty	Greater visibility of the insured amount	Final amount can vary
Premium	May differ based on chosen value	Priced using insurer assessment
Best question to ask	“Is this amount enough for my needs?”	“How will you calculate market value?”

Neither option should be judged on the label alone.

Ask the insurer:

• What insured amount appears on the quote?
• Does that amount change at renewal?
• How is market value calculated?
• Are accessories included?
• How are factory options treated?
• What happens if the vehicle is written off?
• Are registration or other costs included in a total-loss settlement?

This matters more when finance is involved. If you are considering car finance, check how the insured value compares with the amount you expect to borrow. If a financed vehicle is written off, the insurance payout and the loan balance can be different figures.

Why Checking Insurance Costs Early Matters

Insurance has become a larger household expense.

The Insurance Council of Australia reported that average comprehensive motor insurance premiums rose 42% from 2019 to 2024, reaching an average of $1,052 a year in 2024. Repair and replacement costs have played a major role in rising premiums.

These figures do not tell you what your own premium will be. They do show why insurance deserves a place in the budget before you choose a vehicle.

A $1,000 difference in vehicle purchase price might look significant during a dealership comparison. A meaningful difference in annual insurance, fuel or servicing costs could change that comparison over several years.

Excess, Exclusions and Young-Driver Considerations

For people researching first car insurance Australia, the premium often gets most of the attention.

The excess deserves just as much attention.

You may have more than one excess

A policy can have a basic excess plus driver-related excesses.

Depending on the policy, these can include:

• basic excess
• voluntary or optional excess
• young-driver excess
• inexperienced-driver excess
• unlisted or undeclared-driver excess
• learner-driver excess

If you are buying your first car, ask the insurer for the total excess that could apply, rather than asking about the basic excess alone.

If this is your first time arranging a vehicle loan, Patrick Auto Group’s car finance for first time buyers guide can help you review approval factors, common fees and a practical budgeting approach before committing.

Check who can drive the car

Will a parent, partner, sibling or friend regularly use the vehicle?

Tell the insurer when requesting the quote and ask whether each driver needs to be listed.

Do not assume occasional or unlisted drivers receive the same cover. Claim eligibility can depend on who was driving and what the policy permits.

Ask about modifications and accessories

If the car has non-standard wheels, suspension changes, performance modifications, electrical accessories or other aftermarket equipment, disclose them when asking for cover.

Ask:

• Is the modification accepted?
• Does it change the premium?
• Is its value included?
• Does it affect the agreed value?
• Is proof of installation required?
• Does the modification create any claim conditions?

Written confirmation can help prevent assumptions later.

Get a Quote Before You Sign

You do not need to own the car before checking what insurance may cost.

For each shortlisted vehicle, collect the details an insurer is likely to request. This may include the make, model, year, variant and where the car will normally be parked.

Then follow a simple comparison process.

1. Use the same details for every quote

Keep the drivers, address, kilometres and cover level consistent so the comparison reflects the vehicle rather than changing inputs.

2. Compare the annual cost

Monthly payments can look smaller, but check the total amount payable across the policy year.

3. Compare excesses

Record the basic excess and any age, inexperienced-driver or unlisted-driver excess.

4. Check the insured value

For comprehensive cover, note whether the quote uses agreed value or market value and what that could mean after a total loss.

5. Read the exclusions

Look for conditions that relate to how you plan to use the car.

6. Recalculate your car budget

Add the insurance estimate to:

• purchase price or finance repayments
• registration
• CTP
• fuel or charging
• servicing
• tyres
• parking
• tolls where relevant

Budget for the full cost of running a vehicle rather than focusing only on the purchase price or loan repayment.

In NSW, CTP or Green Slip insurance is required for vehicle registration, but it covers personal injury rather than damage to vehicles or other property.

That distinction matters. Having CTP does not mean your own car is covered for accident damage.

Compare the Car and the Ownership Cost Together

Your insurance quote may give you another useful way to compare two vehicles that both suit your needs.

For example, Vehicle A could have a lower purchase price but a higher insurance premium and excess. Vehicle B could cost more upfront yet produce a different ongoing-cost profile.

If you are comparing a used car for sale with one of Patrick Auto Group’s new cars for sale, run insurance quotes for both before focusing on the sticker price alone. Vehicle age, value, model and repair costs can affect the insurance calculation.

There is no single figure that decides which vehicle fits every buyer. The useful comparison is the combination of:

purchase price + finance cost + insurance + registration + running costs + servicing

Once you have narrowed the list, insurance quotes can give you another piece of the ownership-cost picture before you commit.

Contact Patrick Auto Group

A car should fit more than your wish list. It needs to fit your real budget after the ongoing costs are counted.

Patrick Auto Group offers new, demo and used vehicles, giving buyers a broad starting point for comparing body styles, drivetrains, prices and other vehicle details.

Start by comparing vehicles that suit how you drive and what you can comfortably spend.

Then request insurance quotes on the strongest options.

If finance forms part of your purchase, review estimated repayments alongside insurance, registration, fuel and servicing costs so you can see the complete monthly picture.

Compare Patrick Auto Group's current vehicles, shortlist the cars that fit your needs, then request a finance estimate to build a clearer ownership budget.

FAQs

Do I need comprehensive insurance if I finance a car?

It depends on your credit contract. A credit provider may require a financed vehicle used as security to be insured against loss or damage. This can mean comprehensive insurance for a financed car.

Check the terms of your finance agreement before taking delivery.

Is comprehensive insurance the same as CTP?

No. In NSW, CTP insurance is required for registration and relates to personal injury from motor accidents. It does not cover damage to vehicles or property.

Comprehensive insurance is a separate product that can cover loss or damage to your vehicle and damage you cause to other people's property, subject to the policy terms.

Is agreed value better than market value?

Each method works differently. Agreed value sets an insured dollar amount for the policy, whereas market value is assessed using factors such as the vehicle's make, model and condition.

Compare the premium, insured amount and policy conditions before selecting either method.

Can modifications affect my car insurance?

They can. Insurers have their own acceptance rules, pricing and policy conditions. Tell the insurer about modifications or aftermarket accessories when requesting a quote and check how those items would be treated in a claim.

When should I get car insurance before buying a car?

Getting indicative quotes once you have a shortlist can help you compare ownership costs before committing. Once you have chosen the vehicle, confirm the final policy details and commencement date with your insurer before relying on the cover.

That extra check can help you choose a car with clearer expectations around the premium, car insurance excess, cover and total monthly budget.