Retail, trade or market value: which one should you insure for?
Three cars, identical in every way, can be written off on the same day and pay out three different amounts. Nothing about the accident decides that. One line on the policy schedule does, and most people have never read it. Here is what retail, market and trade actually mean, which one you are probably on, and what the difference is worth in rand.
Pocket Nerd editorial · Checked 27 September 2026 · 7 min read
The one line that decides everything
Your policy schedule has a line about how your car is valued. It is usually one word. That word is worth more than almost anything else on the document.
When a car is written off, stolen or hijacked, the insurer does not give you a new car and does not pay what you paid. It pays what your car was worth on the day, according to the basis in your policy.
There are three bases in common use in South Africa, and on the same car on the same day they produce noticeably different amounts. The gap is not small: on a mid-priced car it runs into tens of thousands of rand.
The three, in plain words
Retail value
What a dealer would sell the car for
The highest of the three, because it includes the dealer's margin, their warranty and the cost of getting the car onto a forecourt. If your policy pays retail, a write-off puts you closest to being able to walk into a dealership and replace the car.
Best for you. Usually the most expensive premium.
Market value
Roughly what the car changes hands for
Sits between the two. Some insurers define it as the average of retail and trade, others use their own book. If your schedule says market value, ask in writing how they calculate it, because the definition is not standard across the industry.
The middle. Ask how they work it out.
Trade value
What a dealer would pay you for it
The lowest of the three. It is what a dealer offers when they take your car in, knowing they still have to recondition and resell it. A policy paying trade value on a financed car is where settlement shortfalls come from.
Cheapest premium. Biggest gap on a claim.
See it on your own car
Put in what your car is worth and what you still owe. You will get the answer on all three bases at once, which is the whole point.
Its retail value. Your policy schedule or a dealer site will give you this.
The settlement figure from your bank, not the monthly instalment.
What you pay towards a claim before the insurer pays anything.
Why three answers?
Your policy pays out on one of three valuations, and which one is a single line on your schedule. Most people have never looked, and assume the most generous of the three.
If you do not know which you are on, plan around trade.
Put in what the car is worth and what you still owe. You will get three answers, because your insurer could pay any one of them.
Nothing is sent anywhere. This runs in your browser.
An estimate, not a quote and not advice. Market and trade are shown as a share of retail to illustrate the difference between the three bases. A real valuation depends on the model, mileage and condition, and your insurer uses its own book. Your policy schedule says which basis you are on. Our other tools.
How to find out which one you are on
It takes about two minutes and it is the single most useful thing you can do with your policy document.
- 1
Find your policy schedule
Not the brochure and not the welcome letter. The schedule is the document listing your car, your cover and your excesses.
- 2
Look for the valuation line
It will say retail, market, trade, or occasionally agreed value. It is often in the vehicle section rather than near the premium.
- 3
If you cannot find it, phone and ask
Ask them to confirm in writing which basis your payout is calculated on. A straightforward insurer answers this in one line.
- 4
Check it still makes sense
A car loses value faster than a loan comes down in the early years. Worth rechecking every year rather than at claim stage.
When the cheaper basis is the right call
This is not an argument for always buying retail cover. Sometimes trade is the sensible choice.
If the car is paid off and you could replace it out of your own pocket, a lower payout basis with a lower premium can be perfectly reasonable. You are carrying a risk you can afford.
The problem is carrying it without knowing. Paying for trade cover while assuming retail is the worst of both: you get the smaller premium you did not choose and the smaller payout you did not expect.
It matters most when the car is financed. If the bank is owed more than the insurer pays, the difference is yours, on a car you no longer have. That gap is what credit shortfall cover exists for.
Questions people ask
- Is retail or trade value better for car insurance?
- Retail pays out more, so it protects you better if the car is written off, and it usually costs more each month. Trade pays out least. Neither is right for everyone: what matters is knowing which one you are on, and whether you could cover the difference if the car were written off tomorrow.
- What is market value on a car insurance policy?
- It sits between retail and trade, and it is the least standardised of the three. Some insurers define it as the average of retail and trade, others use their own valuation book. If your schedule says market value, ask your insurer in writing how they calculate it.
- Can I change my policy from trade to retail value?
- Usually yes. It is a change to your cover rather than a new policy, and it will raise your premium. Ask for the new premium and the new payout basis in writing before you agree, and check whether any excess changes at the same time.
- What happens if my payout is less than I owe the bank?
- You still owe the difference, on a car you no longer have. This is called a settlement shortfall, and cover for it is sold as credit shortfall cover. It is most common in the first years of a finance agreement, when the car is losing value faster than the loan is coming down.
Now go and check what you are paying
Knowing how the cover works is most of it. The rest is not overpaying for it. You choose which insurers get your details, and nobody else does.
Where this comes from
No published figures are used on this page. Retail, market and trade are defined by your own policy schedule and by the valuation book your insurer uses, and those differ between insurers.
The percentages in the calculator are illustrative, and labelled that way, so you can see the shape of the difference. A real valuation depends on the model, mileage and condition of your car.