as has been said, it is the damage you may cause to others not the value of you car. For instance, you are unlucky enough to hit a brand new merc up the arse with 4 occupants who all claim for personal injuries.

The cost of your fez is insignificant in comparision to the cost of:
Repairing the merc
recovering the vehicles
courtesy cars
solicitors fee
hospital and doctor fees
personal injuries payments
etc etc

ANd that can just be a standard bump with standard payouts.

Best adivce is to ring around and see if there are ways to lower your policy ie
limited milage
insured to drive the car between certain hours ie 7am - midnight
higher excess
third party fire and theft cover
garaged or parked on a drive at night

also, often how you present yourself over the phone can go along way, my mates son recently got his insurance cancelled mid policy after a bump, it is almost 100% down to the fact he sounds like a chav fool on the phone 'innit, fukin wot yeah' he spoke to the insurance company sorting out the crash and can imagine what impression they got of him!

Polite and educated is the impression you want to get across.