March 27, 2020

Agreed Value Car Insurance Guide

 

Agreed value car insurance is a car insurance option that many car owners are choosing—but is it right for your needs? If you are planning on buying car insurance, it is important to understand the type of insurance you buy and whether or not something like agreed value insurance could be the best option. The following guide will help you understand more about agreed value insurance and how to decide if it’s the right choice for your needs.

What is Agreed Car Value Insurance?

Agreed value insurance refers to an agreed-upon value that both you and your insurance company place on something; in this case, the agreed value insurance would refer to the agreed-upon value of your car. Agreed value insurance is unique because it guarantees that you will receive the complete value stated in your insurance in case the car is over considered a total loss due to an accident.

Unlike traditional insurances, cars which are insured with an agreed value contract do not depreciate–at least in the context of your insurance company. This particular feature does come with something that many car owners will need to carefully consider: a requirement for more frequent policy renewals that require regular appraisals for your car. For instance, your agreed value insurance may last for 2 years, at which time the insurance company will require a new appraisal before they will renegotiate another agreed upon value for your car.

Agreed Car Value vs. Stated Car Value

Agreed insurance is not the only type of insurance based on values. Stated value insurance is another type of value-based insurance that many car owners confused for agreed value. However, these two types of insurance are drastically different.

Stated value insurance is more common with classic cars, rather than modern and new cars. Stated value insurance is based on the stated value that that the car owner provides, rather than a mutually agreed-upon value between the insurance company and car owner. Some insurance companies will require documentation to prove the stated value, but this is not always the case.

The most notable difference between these two types of insurance is the amount of money car owners are likely to receive in the event of a loss. Most insurance companies will not pay the full value of stated value insurance, whereas with agreed up on insurance; they will pay the full agreed upon value.

For example: Let’s say that you provide a stated value of $120,000 for your classic car. You are in an accident and the car is a total loss. It is now up to a provided underwriter from the insurance company to determine the current market rate. So if they find that the current market rate for your classic car is only $70,000, then you will only get $70,000.

Final Thoughts

You may not get the highest value possible when you use agreed upon value, since insurance companies are more likely to haggle you down to a price they find acceptable—but this is a much more secure option considering the guarantee provided by agreed upon value insurance.

 

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