Agreed Value Insurance | Bankrate

Agreed value insurance is not as common as a standard auto policy, so you may have questions if you’re advised to purchase it for your unique or classic car. With agreed value insurance, the insurer pays you an agreed upon amount based on the value of your car, which can be helpful if your car can’t be valued by a well-known site like Kelley Blue Book or Edmunds. That said, agreed value insurance isn’t right for everyone, so you may want to learn more to see if this coverage is best for your situation.

How does agreed value insurance work?

With an agreed value insurance policy, you and your insurance provider come to an agreement on how much your vehicle is worth, which is the maximum amount of money the insurer will pay after a covered loss. If you have a claim, you are entitled to either the full amount required to fix the car or the agreed-upon value.

Agreed value insurance policies are not particularly common. They are often used when insuring a classic car, an antique car or a vehicle that is expected to appreciate over time rather than lose value.

The process of getting agreed value car insurance is slightly different from getting a standard actual cash value (ACV) or stated value policy. You will need to provide a statement of property value, which indicates how much your vehicle is worth and why the value is justified.

To value your car, an assessor will typically consider its classification and condition. The condition usually denotes the historical aspect of a car, such as whether it is antique or vintage. They will also look into the sales of comparable vehicles, which may be challenging if your car is unique or rare. Again, this is another reason why agreed value insurance might be a better fit for uncommon vehicles.

Premiums for agreed value insurance policies are typically more expensive than an ACV car insurance policy. Here are some of the factors that car insurance companies look at to determine the cost of agreed value car insurance:

• Your vehicle: The specifics of your vehicle, such as its age, make and model will impact the cost of agreed value insurance.
• Your mileage: If your vehicle is used as a daily driver, your agreed value insurance premium will likely be more expensive due to the increased risk of a claim.
• Where the vehicle is stored: Storing your vehicle in a garage may help keep your premium lower than if you park your car in an uncovered driveway. In fact, some insurance providers might require you to store your vehicle in a garage or secured space in order to qualify for coverage.

Who should consider agreed value insurance?

Agreed value insurance is not right for everyone. It can be a good option if you want to insure a classic car, a collector car or a customized vehicle. If your car’s value cannot be easily pulled from a site like Kelley Blue Book or Edmunds, you might want to consider an agreed value policy.

One of the biggest benefits of an agreed value policy is that you can get a higher amount of coverage for your vehicle. Agreed value insurance does not factor in depreciation, which can result in a lower payout following a claim.

A drawback of agreed value insurance is that the premium tends to be more expensive due to the fact that you are paying for a higher level of coverage. However, because you are entitled to a much larger payout after a claim, the higher premium may be worth it, especially if your vehicle would be difficult to repair or replace out of pocket. For instance, you might choose agreed value coverage if you have a custom vehicle that has specialized parts that would be hard to source.

If you’re considering stated value versus agreed value car insurance, consider the pros and cons for agreed value insurance:

Pros

• Potential for higher coverage amount
• Provides coverage for a classic, antique or customized vehicle
• Depreciation doesn’t factor into the policy
• Offers financial peace of mind

Cons

• Premiums are typically higher
• More expensive premiums if you drive the vehicle frequently instead of storing it
• Insurer might specify storage rules
• Not offered by all insurance providers

Agreed value versus other insurance policies

Most auto insurance policies reimburse you after a loss based on your vehicle’s stated value or ACV. While these types of policies offer lower payouts, they are usually less expensive than agreed value policies. Here are the differences between these kinds of insurance:

Agreed value vs. stated value

Agreed value and stated value sound similar, but if you look closely at stated value vs. agreed value, you’ll find they are very different. With a stated value policy, you, as the policyholder, get to determine — or state — how much your vehicle is worth. The insurance company will ensure that the proposed value is within a reasonable range and may ask for proof to back up the amount. However, unlike an agreed value policy, there is no guarantee that you will receive the full stated value after a claim.

Like an agreed value policy, stated value policies are often used to insure classic cars, collector cars and modified cars that have a high value. The premiums tend to be slightly less expensive than agreed value insurance because your payout after a claim will vary.

Agreed value vs. actual cash value

ACV is the standard reimbursement method for a regular car insurance policy. It is the value of your vehicle at the time of a loss, which includes depreciation. Your insurance company determines the ACV of your vehicle when you purchase a policy based on the age, mileage, make, model and other vehicle-specific factors. The value determined is largely out of your hands, although you could request a reevaluation if you feel the vehicle is worth more.

The biggest benefit to an ACV car insurance policy is that the premiums are generally the most affordable. On the other hand, your payout will often be much lower than that of an agreed value insurance policy. An ACV policy is sufficient for most regular vehicles, but it may not offer enough coverage if you have a classic car or antique vehicle.

How to get agreed value insurance

Your vehicle will most likely have to meet the same requirements for classic or antique cars. For instance, an insurer might require that your car is a certain age, typically a few decades old, and in good condition. You may be asked to submit photos that show its valuable condition. An insurance provider might also require that you don’t drive the vehicle regularly and that you store it in a garage. To learn more, speak with a licensed insurance agent before agreeing to a policy.

In general, here are the steps you may need to take to get agreed value insurance:

1. Find several insurance providers who offer agreed value insurance.
2. Request a quote from several insurers.
3. Compare coverage details and premiums.
4. Fill out an application in person or online.
5. Submit the required documentation, like photos or a statement of property value.
6. Pay the first premium to activate coverage.

Frequently asked questions

• What is the best car insurance company?
  

  The best car insurance company differs for each driver and depends on a variety of factors, including how much insurance you need, where you live, what type of car you drive, how much you want to spend, what discounts you qualify for and what qualities you value in a car insurance company. To find the best provider for you, request quotes from a number of providers. Use the same coverage amounts so you can do an apples-to-apples comparison and keep in mind that quotes often include discounts that you would be eligible for.

• How much does agreed value insurance cost?
  

  Agreed value insurance premiums vary by individual since personal factors like age, gender, location and driving history all impact your rate. Drivers pay an average of $2,458 per year for a full coverage policy that typically includes collision and comprehensive coverage. While an agreed value policy usually costs more, this can give you a baseline to compare against. To determine your exact cost for agreed value insurance, request quotes from several insurance providers. Don’t forget to factor in any discounts that you’re eligible for.

• Is replacement cost value the same as agreed value?
  

  The replacement cost value (RCV) of your vehicle is not the same as the agreed value. After a claim, a RCV policy will compensate you based on the value of your vehicle in its original condition, which does not factor in depreciation or any appreciation that may have occurred with upgrades and modifications. Unlike agreed value, your insurance company determines the replacement value of your car. Both of these policies are usually more expensive than a standard ACV policy.

• Who is eligible for agreed value insurance?
  

  As long as you find an insurance provider that offers the coverage, just about anyone can buy agreed value insurance. Keep in mind that an insurance provider may offer this coverage through a partner who underwrites the policy. If this is what your current insurance provider does, you may want to check that you’ll still get a bundling discount if you have more than one insurance policy with the company.