The used car industry in the Philippines has grown increasingly competitive as car sales continue to rise in the country. As a car owner, you should be aware of your vehicle’s current market value, as this knowledge will be useful when purchasing auto insurance or selling the vehicle.

Knowing the exact value of your automobile will help you get the best price when it comes time to sell it. Continue reading to learn more about the relevance of used car valuation and its impact on insurance.


What is the definition of used car valuation?

When buying or selling a used car, you must first determine the vehicle’s exact market worth.

You may not obtain the greatest price when selling or buying a used car if you don’t know the true value of the vehicle. If you want to sell or buy a used car, a second-hand car value is crucial.

The process of calculating the accurate worth of a vehicle is known as second-hand automobile appraisal or old car valuation. The value of a used car is affected by several factors such as depreciation, accident history, service history, make/model, and mileage.

The older the car, the more the depreciation, and thus the value lowers as depreciation rises. IDV, or Insured Declared Value, is the value determined following the used car valuation in the case of car insurance.
The approximate market value of a car is calculated when the above-mentioned elements are taken into account. In car insurance, the IDV is highly important because it is also the maximum sum covered. Your second-hand car’s value is determined by the IDV, and you should always disclose the right value of your second-hand vehicle. The rate of depreciation levied on second hand cars is shown in the table below:

The Vehicle’s AgeDeprecation for IDV (In Percentage)
Up to 6 months5
6 months to 1 year15
1-2 years20
2-3 years30
3-4 years40
4-5 years50


Car Insurance Effects of Used Car Valuation:

When it comes to car insurance, understanding the exact worth of a vehicle is critical. The cost of car insurance is estimated based on the vehicle’s worth. In other words, the vehicle’s IDV determines the car insurance rate.

That is why, when purchasing car insurance coverage for your used automobile, considerations such as depreciation, accident history, and mileage are critical.

It makes no difference whether you’re trying to sell or acquire a used car. The value of an old car has an impact on car insurance.

The impact of second-hand car valuation on insurance in various scenarios is shown below:


If you’re a seller

If you underprice the automobile to lower the insurance cost, you’ll miss out on the long-term earnings you could make when you sell it.

Another downside of underpricing an automobile is that due to the lower value indicated in the insurance policy, you will receive a reduced claim amount. If your automobile is totaled or stolen, you will be out of pocket.

Similarly, overpricing your vehicle is a bad idea. Keep in mind that IDV has an impact on auto insurance premiums. Overpricing now means you’ll pay a higher auto insurance premium, and there’s a chance you won’t get the same claim amount if your vehicle is stolen or totaled.

Aside from that, finding buyers for a costly car will be difficult. So, whether you’re getting insurance or selling a car, always state the exact value.


If you’re a buyer

Always verify whether a secondhand automobile has a Comprehensive Car Insurance Plan or a Third-Party Car Insurance Plan before purchasing it. Check the IDV on the insurance certificate to see if the owner has recorded the correct value of the vehicle.

When purchasing car insurance, some used car owners purposefully lower the IDV. On a short-term basis, it might be advantageous. However, it could be a problem if you seek a damage/total loss claim. The insurer will not pay you the actual worth of the car because of the inaccurate claimed value.


Car Insurance Policy Transfer

If a second-hand car has an active car insurance policy, the seller/owner of the vehicle must notify the insurance company of the sale. Such details must be mentioned by the vendor and given to the insurer in writing.

Aside from that, the seller must pay the insurer a minimal charge, and the value of the NCB must be paid from the date of transfer until the auto insurance policy expires.


Factors Affecting the Value of a Used Car:

As previously said, a number of factors influence the value of a used car. The following are the aspects that influence the value of a used car:

  • Physical Condition: The physical condition of the vehicle is one of the most important criteria in determining the value of a used car. When appraising a used car, one should thoroughly inspect the exterior and interior of the vehicle, looking for any dents, rusting, chipped paint, or body damage.
  • Check the car’s service history to see if it’s been maintained at the authorized service center at regular intervals. A car that has been serviced on a regular basis will be in better shape and have a greater resale value.
  • Mileage: Checking the total mileage traveled by the vehicle is one of the most crucial elements to consider when analyzing a used car. It gives a basic indication of the state of the vehicle’s various components.
  • Accident History: Look at the vehicle’s accident history to see if it has been involved in any serious collisions. Damage to the chassis and body can severely reduce a car’s resale value.
  • Make and Model: If the second-hand car model has been discontinued, finding spare parts will be difficult. Owning a defunct model might be costly due to the difficulty in obtaining spare parts.
  • Check the vehicle registration records to see if it’s hypothecated, as well as the ownership facts of the secondhand car. Also, double-check that the chassis number on the Registration Certificate corresponds to the vehicle’s chassis number.
  • Finally, test drive the car to assess its driveability and listen for any noises coming from beneath the chassis. Also, make sure that all of the vehicle’s features, such as the air conditioning, windows, and lights, are in good order.



For both the seller and the buyer, knowing the exact value of a used car is critical. Make sure you appropriately appraise a used car so you don’t lose money when selling or buying one.

Keep in mind that the value of a used automobile has a direct impact on insurance costs, and you should never quote an incorrect car value when purchasing a motor car insurance policy.