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Collector Cars: Agreed Value vs. Stated Amount Insurance
Eric Rongstad

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 to your prized vehicle. You wonder if there is a way to be sure you will know what you will be paid in the event of a total loss to your collector vehicle.

There is a way to do this. You can get the coverage you want by purchasing what is called an "Agreed Amount" or "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

The most common type of coverage is actual cash value (ACV). Most cars are insured for ACV, and this would be the way the cars you drive every day and have insured on a standard personal auto policy are covered for loss or damage to the vehicle. If you have a total loss, the adjuster will determine what the car was currently worth just prior to the loss, and this is the amount you will be paid for the car (minus your deductible).

Stated Amount or Stated Value

The second type of coverage would be stated amount. In many cases, an individual will ask the insurance company that insures their own 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. This endorsement changes the loss payable clause to read:
"In the event of a total loss we will pay either the stated amount or the actual cash value, whichever is less."

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 eases where this type of coverage would be OK, this is not the type of coverage that most people want for their collector car.

Agreed Amount of Agreed Value

Most insurance companies that specialize in insuring collector cars will use Agreed Value coverage. At the time the policy is issued, the insurance company will look at the car and any documentation they may require such as photos, appraisals, or receipts, and they will agree on a value for the car and insure it for that amount. This agreed value will be listed on the policy declarations page along with the vehicle information. The loss settlement clause in the policy will then read something like this:

"In the event of a total loss, we will pay the agreed amount indicated on the declarations"

This is the coverage that you want to have for your collector car. Very simple, with no question what the value is or what you will be paid.

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.

If you have any questions about this, or if you have a collector car you would like to insure, please contact us today!

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