Agreed Value Insurance vs. Stated Value Insurance
Classic, Collectible and Custom Vehicles need to be properly insured
Classic, Collectible and Custom automobiles typically have stable values that appreciate over time. Because the values are stable, an Agreed Value insurance policy should be obtained to protect your collectible automobiles- those vehicles that are worth more than book value. The agreed upon value is an amount which has been agreed to by your insurance company based on your car's make, model, year and documented customizations. Agreed value policies ensure that, should you ever have to make a claim in the event of a total loss or diminished value claim, the sum of the pay-out will be based on your policy as the “agreed value” and not the fair market value.
Most auto policies issued by major insurance companies are for "stated value" coverage. This covers most late model cars without after market upgrades. Stated value determines how the insurance company rates your vehicle, but doesn’t necessarily determine how much they will actually pay you if your vehicle gets totaled. The fine print in a stated value policy is usually worded in a way that allows them to pay out the stated value amount or the actual cash value, whichever is lower.
Owners of collector vehicles, as well as vehicles worth more than the book value, should consider an agreed value policy and take care to not get the two confused. It’s a good idea to verify the type of coverage you have now to avoid an unfortunate situation in the future.
Because a professional appraisal is required for agreed value policies, coverage is without any hidden “gotchas”. If your car is stolen or totaled, you will receive the value agreed to by the insurance company when your policy was written.
For customs and show cars, the replacement value can greatly exceed the fair market value, or actual cash value, for these vehicles. That’s why it's very important to have agreed value insurance. The replacement value of your street rod or show car needs to include the cost of a donor car, the cost of materials and pay for the hours of labor to replicate these custom built vehicles. An appraisal is not only important for getting an agreed value policy, but in the event of a claim, having an appraisal from Auto Appraisal Network of Sacramento will be invaluable for establishing the value of your vehicle with the at-fault party.
Agreed Value Insurance: For classics, collector vehicles or custom cars
Stated Value Insurance: For daily drivers