When it comes to insurance, a primary concern – and rightfully so -- of classic and collector car owners is how much your policy will pay out if you have an accident and your car is a total loss.
Of course, much of that payout depends on what type of coverage you have on your vehicle. We’ll talk about two types in this article, Stated Value and Agreed Value, but first we must review something called Actual Cash Value.
Because most cars begin depreciating the moment they’re driven off the lot, standard insurance companies insure your cars accordingly. They will adjust your payout based on what the car would be worth the day of the accident (prior to any damage occurring), instead of what you originally paid. This is referred to as a vehicle’s Actual Cash Value.
Stated Value is coverage that reflects an amount that is “stated” at the onset of the policy. You tell your insurer what your car is worth (with proper documentation) and it is insured for that amount. The caveat here, however, is that the insurance company can choose to pay you either the Stated Value or the Actual Cash Value, whichever is less.
Alternatively, Agreed Value, coverage primarily offered by specialty insurers, is based on the proven value of your car as determined by you and the insurance company, according to appraisals, photos, or other relevant documentation. With Agreed Value coverage, the insurance company will guarantee that they will pay this agreed-upon value in the event of a covered total loss.
If you own a classic or collector car that is maintaining or increasing in value, Agreed Value is the best option to consider, or you risk losing out significantly if you have an accident. It’s important to note that most standard insurance companies do not typically offer Agreed Value, unless they partner with a specialty provider.
If there’s anything you should know about your insurance, this one’s at the top of the list. Ask your insurance company what kind of coverage you have, and make sure it is Stated Value or Agreed Value, as we call it here at Hagerty.