The method
How we calculate market value
Built on AFCA's published definition of market value: the average value of similar cars, allowing for age, kilometres and condition. Comparable cars for sale, adjusted for kilometres, plus your accessories at today's value. Every figure is shown in your report.
- 1
Find 3 comparable cars for sale
Cars for sale in the same state or territory as yours, the same year, make, model and variant, with no damage or write-off history, and listed within the last 90 days if the date is shown. You find them in your own browser and add each one by screenshot or link. If only one or two are for sale in your state, you can continue with those, and the report says so. Cars from other states aren't used.
- 2
Average the prices and the kilometres
Add up the advertised prices and divide by the number of cars (usually three). Do the same with their kilometres.
- 3
Adjust for kilometres
Kilometre adjustment = ((average km − your car's km) ÷ 10,000) × $100, in proportion. If the comparables have done more kilometres than your car, the average price is adjusted up; if fewer, down. The adjusted market value is the average price plus this adjustment.
Why $100 per 10,000 km
It's a fixed rate (1 cent a kilometre), applied the same way to every check, so anyone can see how the adjustment was worked out and check it. It's deliberately modest: the comparable cars already share your car's year, make, model and variant, so their advertised prices do most of the work, and the adjustment only evens out the difference in kilometres.
- 4
Add accessories at today's value
Accessories lose value over time, like the car. Each one is valued at its invoice cost (or, if the invoice is lost, the current advertised price of the same item new) × the greater of 0 and (1 − 10% × years since it was fitted). Years are days ÷ 365.25.
Why 10% a year
A 10% drop each year means an accessory loses its value evenly over about 10 years, our assumption for the working life of quality car accessories. It's the same straight-line approach the Australian Taxation Office describes as the prime cost method for working out how assets lose value over time. The ATO uses it for tax, not market value, but a fixed yearly rate means you, your insurer or AFCA can check exactly how each figure was worked out. ATO: prime cost and diminishing value methods
- 5
Compare with your insurer's valuation
Our valuation is the adjusted market value plus accessories, rounded to the nearest dollar, and it's compared with the market value your insurer assessed, before any deductions. If the difference is within the greater of 3% of that valuation and $500, our valuation is treated as in line with your insurer's. Deductions, such as the excess, are separate and aren't part of the comparison.
A worked example
A 2018 Toyota Hilux SR5 with 80,000 km, using the default settings.
| Listings: $30,000, $31,500 and $29,000 | Average | $30,166.67 |
| Kilometres: 70,000, 95,000 and 60,000 | Average | 75,000 km |
| 75,000 km is 5,000 km fewer than 80,000 km | × $100 per 10,000 km | −$50.00 |
| Adjusted market value | $30,116.67 | |
| Bull bar $2,400, fitted 2.5 years before | $1,800 | |
| Tow bar $900, fitted 6 years before | $360 | |
| Our valuation | $32,277 | |
Against an offer of $29,500 the difference is $2,777 (9.4%), more than the fair margin of $885. See it as a full sample report.
What doesn't count
- Listings from another state, or for a different year, make, model or variant.
- Listings for cars that are damaged now, such as "as is" or "not running", and listings with write-off history, such as "repairable write-off" or "WOVR".
- Accessories that come standard on the variant.
- Items that don't usually add value. Accessories we include: Bull bar, Tow bar, Canopy or tray, Roof racks, Side steps, Winch, Aftermarket wheels, Head unit or stereo, Suspension lift.
AFCA's approach to market value
The Australian Financial Complaints Authority (AFCA) publishes how it approaches complaints about written-off cars, in The AFCA Approach to motor vehicle total loss complaints (April 2023). Every report includes this section.
How AFCA defines market value
“The average value of vehicles of a similar make and model, taking into account the age and condition of the vehicle. Can fluctuate, depending on individual factors such as lower usage and the way in which the vehicle has been looked after. The term is usually specifically defined in an insurer's policy.”
How this valuation follows it
- The average value
- The average advertised price of three comparable vehicles
- Similar make and model
- Same make, model and variant
- Age
- Same year of manufacture
- Lower usage
- Adjusted for the difference in kilometres
- Condition
- No listings with damage or write-off history
Evidence AFCA asks a complainant for
“What they consider the pre-accident value of their vehicle was, with any supporting information (this may include assessor reports, valuations or sale advertisements)”
Valuation guides and listings (case study 853601)
AFCA's adjudicator disagreed with an insurer's pre-accident market value. The valuation guide the insurer relied on "did not fairly reflect the insured vehicle's pre-accident market value. It was $10,900 lower than the Redbook average retail figure and significantly lower than other car sales listings."
AFCA says each complaint is unique, its approach documents are a guide only, and no determination is a precedent for future cases. DisputeX isn't affiliated with AFCA.
DisputeX is a document preparation service and doesn't hold an Australian financial services licence. DisputeX gives general information and a calculation based on the information and listings you provide. It isn't legal or financial advice or an opinion on your claim. We're not your insurer, a law firm or a claims representative, and we don't contact your insurer for you.