What determines the declared values of vehicles in insurance?

The declared values of vehicles in insurance are primarily determined by the current market value. This value reflects what the vehicle would generally sell for in the open market at a given time, taking into account factors such as age, make, model, condition, and mileage. Insurers often use market research and valuation services to assess this value accurately, ensuring that the insured amount aligns with prevailing market trends.

This approach allows both the insurer and the insured to have a fair understanding of what the vehicle is worth, thus providing appropriate coverage in case of a loss or damage. Using current market value helps to ensure that the insured amount is neither overestimated nor underestimated, allowing for equitable compensation in the event of a claim.

The other options relate to different aspects of vehicle valuation but do not specifically serve as the basis for declaring insurance values. The original purchase price may not reflect depreciation and current trends, estimated resale value might vary widely among sellers and buyers, and average repair costs, while important for underwriting and risk assessment, do not define the vehicle's value.