What is Agreed Value Car Insurance?

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Key takeaways

Agreed value car insurance is a type of policy that protects your car for an amount you agree on with your insurance company.
It’s often a good option for owners of classic, collector and modified cars.
Not all companies offer agreed value policies. You may have to get it from a specialty company.

What is agreed value insurance?

With agreed value car insurance, you and the insurance company agree on your car’s worth. The company gives you that exact amount if your car is totaled or stolen.

People choose agreed value policies to fully protect special vehicles. This type of insurance is popular for antique, collector and classic cars. These cars are often worth more than regular vehicles.

One big benefit of agreed value insurance is that it ignores depreciation. Depreciation means a car loses value as it gets older. With this type of policy, your payout won’t go down over time. You’ll know exactly how much you’ll get if something happens to your car.

How agreed value insurance works

When you go to buy an agreed value policy, the insurance company will make you prove what you think your car is worth. You might need to show certain records to do that. These can include a professional appraisal, recent sales of similar cars or receipts for upgrades.

After you share that proof, you and your insurance company decide on a fixed payout amount. If your car is totaled or stolen, the insurer pays you that exact amount even if the car’s market value has changed.

What are the requirements to get agreed value car insurance?

You must meet certain rules before most insurance companies will sell you an agreed value policy. These include:

Proof of value

To get agreed value car insurance, you must prove how much your car is worth. This can include a professional appraisal, photos and receipts for any upgrades or custom work.

High value

Insurance companies usually only offer agreed value policies for classic, collector, antique or other unique cars. A conventional car usually won’t qualify unless it is rare or has custom changes.

Car condition

Your car must be in good shape to qualify for agreed value insurance. An insurance company may ask for maintenance records or photos to prove it.

Limited mileage

Most agreed value policies limit how much you can drive the car. You can use it for car shows or short drives, but not for everyday commuting.

What is stated value car insurance?

With stated value car insurance, you tell your insurance company how much you think your car is worth. You are not guaranteed that amount if your car is totaled or stolen, though. In those cases, the insurance company will pay you either:

The stated value you agreed to, or
The current market value

You will get the lower amount.

How stated value car insurance works

You buy a stated value insurance policy and say your car is worth $95,000. If someone steals your car or totals it, your car insurance company will check its actual cash value. If it’s worth $70,000, that’s what the company pays you.

Stated value car insurance can be a good idea if:

You don’t qualify for agreed value car insurance.
You want to insure your car for less than its actual cash value so your insurance costs less.
You want to list the car at a higher price to sell as a collector car, rather than as a driving car.

You will probably need a stated value appraisal to get your car insured with a stated value policy. Find a reputable diminished value appraisal company to help you. The insurance company may also ask for pictures of your car and receipts for any work or upgrades you’ve done.

What is market value car insurance?

Market value car insurance pays you what your car is worth when it is stolen or totaled. This amount is based on its current value, not the price you paid when you bought it.

How market value car insurance works

You bought your car for $20,000 a few years ago, but now it’s worth $11,000. If you have a market value policy and your car is totaled, your insurance will pay you $11,000. They will subtract your deductible Your deductible is your share of repair costs for a collision or comp claim. Your insurance company pays the rest. from this amount.

Who needs agreed value car insurance?

Agreed value insurance is a good option for drivers with valuable or unique cars that are hard to replace. This includes owners of:

Classic and vintage cars
Collector cars
Imports
Kit cars (cars you build yourself)
Modified cars
High-performance cars
Refurbished and restored cars

Also, it’s a good choice for drivers who want to avoid a smaller payout if their car’s value drops.

Pros and cons of agreed value car insurance

The main positives related to agreed value car insurance are the guaranteed payout and the fact that the value doesn’t go down. On the flipside, it’s usually more expensive than standard car insurance.

Pros

Protects valuable cars: Agreed value insurance is great for vintage, classic or specialty cars. These cars need more protection than regular insurance offers.
Guaranteed payout: If your car is a total loss or is stolen, you get the full amount you agreed to with your insurance company.
Policy value does not decrease. Your payout will stay the same as your car gets older, unlike most car insurance.

Cons

It’s expensive: Agreed value insurance premiums are often higher than for standard car insurance.
Need for appraisal: You’ll usually need a professional estimate of the car’s value to get the policy.
Hard to get: Some major insurance companies offer it, but it might take you a while to find. Also, you may need to get it from a specialty company.

How do I get an agreed value car insurance policy?

To get agreed value insurance, you need to find a company that offers it. After that, you must apply and qualify for a policy.

Find the right company

Some of the large car insurance companies that offer agreed value insurance:

Allstate
Geico
Safeco

Many big companies don’t offer agreed value insurance. This is because it pays out more than market value. You may have to get it through a specialty insurance company instead.

Specialty companies that offer agreed value car insurance include:

American Collector
Grundy
Hagerty
Heacock Classic Insurance

Apply for agreed value insurance

When you find a company, you’ll need to share certain details about your car and the value you want it insured for. This may include documents like an appraisal, photos and receipts.

Buy your policy

Once you have agreed to a coverage amount, pay the premium to activate the policy. You can choose the date when you want the policy to start.

Frequently asked questions

Get agreed value car insurance if you own a valuable car. This includes limited edition or collector cars. Standard car insurance usually doesn’t offer enough protection for these special kinds of cars.

If you own a rare car that doesn’t qualify for agreed value car insurance, you should obtain stated value car insurance. It gives you more protection than market value car insurance. It also works well to insure the car for less than its actual cash value to save money on premiums.

Get market value car insurance if you have a car used for commuting and general use. Both agreed value and stated value car insurance are usually for rare, high value cars.

Yes, it usually costs more. This is because the car insurance company agrees to pay the full amount if you file a claim. They do this instead of paying the actual cash value.

Not usually. Many agreed value policies limit how many miles you can drive your car.

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