Understanding Auto Insurance Schemes
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Article written by:
Guardian Insurance MX
Published September 7, 2023
Services | Automotive
Auto Insurance Schemes: Fixed Value vs Commercial Value
Auto insurance is a crucial aspect of car ownership, providing financial protection in case of accidents, theft, or damage. Among the various types of auto insurance coverage, fixed value insurance has gained prominence due to its unique approach to addressing car depreciation.
In this article, we will delve into the concepts of fixed value and commercial value in auto insurance, explore how a car depreciates, and highlight the benefits of opting for the right type of coverage.
Car depreciation is an inevitable reality that affects every vehicle owner. As soon as a new car leaves the dealership, its value begins to decrease. Several factors contribute to this decline in value, including wear and tear, mileage, market trends, and technological advancements. Over time, a car’s value can significantly diminish, impacting its resale or replacement cost.
Fixed Value
Commercial value
This type of coverage usually comes with a lower premium compared to fixed-value, and the reason for that is that under the commercial value concept, your vehicle is depreciated every day. So your car may be valued at $500,000 MXN at the start of the policy, but since it depreciates daily if you have a claim 5 months later, your car won’t have the same value.
Most Expats are not aware of the difference between both concepts, and they often find out when they have a claim.
In the world of auto insurance, understanding the impact of car depreciation and the available coverage options is crucial. Fixed value auto insurance stands out as a reliable solution to counter the effects of depreciation, offering consistent financial protection and peace of mind. As a responsible car owner, it’s wise to explore your insurance choices and seek guidance from professionals to ensure that you choose the coverage that aligns with your needs and budget.
Speak with one of our expert brokers today and learn more about our auto insurance policies for Expats.
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