When a truck is written off, the insurance settlement can make or break an operator's ability to replace the vehicle and keep the business running. The choice between agreed value and market value insurance is the single most important decision in your motor vehicle policy — and it's one that many operators don't fully understand until it's too late.
What is agreed value?
Agreed value means the insured amount is locked in at policy inception. You and the insurer agree upfront on the value of the vehicle, and that amount is recorded in the policy schedule. If the vehicle is a total loss, the insurer pays that agreed amount, less any applicable excess.
There's no argument about depreciation. No assessor determining what the market would have paid for a three-year-old Scania with 400,000 km on the clock. You know exactly what you'll receive — and you can plan accordingly.
What is market value?
Market value means the insurer assesses the vehicle's value at the time of the claim — using depreciation schedules, trade guides, and market analysis. The settlement is what the vehicle was worth just before it was damaged, not what it cost to buy or what it costs to replace.
For a working HGV, market value can be significantly less than replacement cost. A 2020 Kenworth T909 with a purchase price of $380,000 and book value of $220,000 might be assessed at market value of $195,000 — but a comparable replacement unit currently costs $310,000. The operator receives $195,000 and has to find an additional $115,000 to replace the vehicle.
The current market reality
The post-Covid supply chain disruption has created a particular challenge for the HGV market. New European trucks (Scania, DAF, MAN, Volvo, Mercedes) currently have lead times of 12–18 months from order to delivery in this country. Used prices have been elevated by this supply constraint — but not uniformly, and not necessarily to replacement cost levels.
The result is that an operator who insures on market value may receive a settlement that buys a used truck at market rates — but if that used truck is comparable to their written-off unit in age and kilometres, it may not be significantly better than what they've lost, and the finance to make up any gap is an additional burden.
Agreed value at current replacement cost eliminates this problem. The insurer pays what it costs to replace the vehicle. The operator is restored to their pre-loss position.
How to set the right agreed value
Setting the agreed value correctly requires understanding current replacement costs for your specific make, model, specification, and mileage level. Sources include:
Your dealer or preferred supplier — ask for a written replacement cost quote for your specific vehicle specification. This is your best basis for agreed value.
Trade price guides — Glass's Commercial Vehicle Guide and similar publications provide benchmark valuations, but these lag current market conditions and don't capture supply constraint premiums.
Your broker — a specialist HGV broker will have current market intelligence from multiple insurers and can advise on appropriate agreed value for your specific vehicle.
The agreed value should be reviewed annually at renewal. If vehicle values have increased (as they did significantly in 2022–2024), your agreed value needs to increase to keep pace. A vehicle insured at $200,000 agreed value two years ago may need $260,000 agreed value today.
The cost difference
Agreed value policies are typically priced at a small premium over market value — usually 5%–15% more. On a vehicle with a $300,000 agreed value, this might be $300–$600 more in annual premium. Given the potential gap at claim time (potentially $50,000–$100,000+), the additional premium is almost always justified.
The verdict
For any working HGV — particularly late-model units, specialist vehicles (logging trucks, tankers, refrigerated units), and owner-operated trucks where the vehicle is the whole business — agreed value is essential. Don't insure on market value. The premium difference is modest; the protection difference is enormous.
If your current policy is on market value, ask your broker to switch to agreed value at the next renewal. And get a current replacement cost quote from your dealer to set the agreed value correctly.
Specialist in heavy vehicle insurance with extensive experience in commercial transport risk management. Connected with specialist HGV brokers across the country.
