If you own a classic or collector car, you may be concerned about the amount that your insurance company will pay you if you have a loss.
You can get the coverage you want by purchasing what is called an “Agreed Value” policy. These policies are generally offered by companies that specialize in insuring classic or collector cars.
There are three different ways that the insurance company can value your car at the time of a loss.
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.
The second type of coverage would be stated value. In many cases, an individual will ask the insurance company that insures their other personal autos to add coverage for their collector car, so the insurance company will add the car to the policy with the stated value endorsement.
The company may even ask for some type of documentation to determine the stated amount at the time they insure the car, and this stated amount will be listed along with the car on the declarations page. Because of this, the insured may think this is what they will be paid if they have a loss.
But, if the claims adjuster thinks that the actual value is less than the stated amount on the policy, they will pay you the lower amount. While there are some cases where this type of coverage would be ok, this is not the type of coverage that most people want for their collector car.
Agreed Value’s definition is short and sweet. You and your insurance company simply come to an agreement on the value of the vehicle. In the event that the vehicle is damaged or destroyed, the insurance company pays out the agreed upon value.
This is the coverage that you want to have for your collector car on your insurance policy.
So, if you do own a collector car, it is important that you understand how your car is insured on the policy you have purchased. You do not want to find out after something happens that you did not have the right coverage.