Agreed Value Car Insurance vs Stated Value Insurance

Agreed Value Car Insurance vs Stated Value Insurance

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Agreed value insurance is a policy for which you and the insurer agree on the value of a covered item. The item is guaranteed to be insured for that fixed amount in the event of a claim.

Since agreed value insurance covers the full value of property, it's commonly used to insure expensive and modified vehicles. An agreed value policy offers a high degree of protection because age and depreciation of a car won't result in a lower payout, which happens with most car insurance policies.

This additional value comes at a cost — quotes for agreed value insurance are typically higher than for a standard policy, and you'll need to have the car appraised before purchasing coverage.

What is agreed value insurance?

Agreed value insurance policies have a maximum payout which is agreed upon by both the insured and the insurer when the policy is purchased. In the case of damage or an accident, the maximum payout is that agreed-upon value. In order to determine the agreed value, owners usually have to have the insured item appraised and submit that value to the insurance company. The insurer may conduct its own assessment as well. Agreed value insurance is often used for classic or collector cars, which don't have a commonly set value or are hard to assess. Some specialty insurers already have their own values for various vehicles, meaning there's no need for an appraisal in those cases. A few factors play into whether you may need an agreed value policy for your car:

  • Pricing: The vehicle does not have a traditional "blue book" value or that value might not be representative of the car's worth.
  • Repairs: Fixing a classic vehicle can require a more specialized mechanic to return the vehicle to its original state, which a standard insurance policy is unlikely to cover.
  • Loss of value: Most cars lose value as they age owing to wear and tear, but some more rare vehicles retain or increase in value with time.

The cost of an agreed value policy isn't just based on vehicle and driver characteristics — each insurance company will frequently set its own terms and conditions, some of which are non-negotiable. In the case of classic cars, common limits include:

  • Mileage: Insurance companies can put caps on the total miles driven in a year. However, your insurer may offer a discount if you agree to drive fewer miles.
  • Usage: If you promise to only drive for pleasure or for show, rather than commuting, this lowers the cost of a policy.
  • Storage: Keeping your high-value vehicle in a private garage, a barn or some other sort of secured storage can also lower your rates. And some companies, such as Geico, won't extend coverage if the vehicle is stored in a public place.

When will you need agreed value insurance?

We recommend that you consider agreed value insurance for items and vehicles for which the value is both high and hard to pin down. An agreed value policy sidesteps any concerns of the insurance company valuing the item differently than the owner by guaranteeing coverage at the agreed value.

Reasons to get agreed value coverage:

  • An item is expensive and hard to replace.
  • You want to protect the guaranteed value of your property.
  • The insured property won't lose value as it ages.
  • You don't mind paying more for that security.

Standard auto insurance policies factor in depreciation because vehicles usually lose value with age. But some situations simply buck that trend. For example, say you recently purchased a 1957 Chevy Bel Air and had its value appraised at $125,000. If you know there are relatively few of these on the market and their prices can vary significantly, you might want to consider an agreed value policy, which would cover the vehicle for up to that $125,000 figure in repairs or pay that total if the car was damaged to the point of needing to be replaced.

Agreed value vs. stated value insurance

Agreed value insurance sets the maximum coverage at the agreed-upon number. Stated value insurance covers whichever is lower between the agreed value, sometimes called stated value, and the actual cash value. The actual cash value is the cost to replace the item and is sometimes called the market value.

Agreed value
Stated value
AdvantagesHigher total coverage because it is tied to the appraised value of an itemMore affordable
DisadvantagesPolicies are usually more expensiveChance of lower payouts because the insurance company pays the lesser of two valuations

The key difference is that with a stated value policy, you might not get that agreed-upon number, even if you provided an appraisal up front. For a high value or specialty car, agreed value insurance has benefits over a stated value policy since it provides greater peace of mind in the event of a claim. If you do consider stated value insurance, we recommend you review the terms and coverage carefully to ensure the policy meets your needs.

Agreed value vs. actual cash value

Actual cash value is the cost of replacing an insured item, factoring in how age has reduced the value. Most auto insurance policies use actual cash value. Agreed value takes into account neither the replacement cost nor age, but only an agreed-upon value at the start of the policy.

Agreed value maximum payout
Actual cash value maximum payout
Does not decline with age of vehicleFalls with depreciation
Replacement cost does not matterBased on replacement cost in case of total loss
Set at start of policyChanges during life of policy

Who offers agreed value and classic car insurance?

Most of the agreed value auto insurance offerings come from specialty companies that focus on classic, collector or modified vehicles. One company, Hagerty, markets its agreed value car insurance policies as "Guaranteed Value." However, some of the largest insurance companies also offer classic car policies, so you may be able to bundle your coverage.

Mileage limit
Regular use allowed
Minimum age
American CollectorsYesNoNone
Geico (through Assurant)YesNoNone
State FarmYesNo20 years

The cost of agreed value insurance is usually higher than the cost of a standard policy. Rates vary based on a wide range of factors, from the value of your vehicle to where it's usually parked. However, cost also changes significantly between insurers — for example, we found that quotes for a 1969 Dodge Charger, a more common classic car, appraised at $73,000 with a 6,000-mile annual limit ranged from $492 to $1,425. Given this, we recommend you compare quotes from multiple companies before purchasing coverage.

Agreed value insurance for jewelry, antiques and commercial property

In addition to high-value cars, agreed value policies can be used for a variety of other valuables, including jewelry, rare musical instruments, antiques and even buildings. For buildings, an agreed value policy can be a way to avoid using coinsurance, which forces policyholders to share a portion of the risk if they insure less than the full value of a building. Agreed value policies lock in the building's total value, making coinsurance unneeded.

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