How does agreed valuation work for classic car insurance policies?

There are many factors which go into determining what sort of coverage and premiums you get when insuring any type of item. Valuation of the item being insured is one of these critical factors. Generally speaking, especially with conventional forms of insurance, the higher an item’s value is in monetary terms, the higher its attendant premiums will be.

For auto insurance purposes, there are three basic ways of determining the value of a vehicle. The first is known as “actual value.” Actual value uses the “book” value of the vehicle, which, of course, depreciates markedly over time – from the instant it’s purchased, in fact. With an actual value policy, you’re never entirely aware of the level of coverage you’re getting, as that information is essentially only given to you definitively in the event that you experience a total loss. Furthermore, it’s almost certain to be much less than you had anticipated, especially if it’s a classic vehicle; agreed value does not take into account the special attributes of a classic vehicle, only its age and its original price.

The second common method is known as “stated value.” Under the stated value system, you are able to state a value for your vehicle. This value also depreciates, though, and in the even of a total loss, these policies generally pay only “up to” the stated value, meaning that, again, you’re not likely to get anything close to the true value of the vehicle.

The third method, “agreed value,” is a must-have for any classic vehicle insurance policy. With agreed value, you, the owner, determine the value of the vehicle, and it stays at that level in perpetuity – no depreciation. (An appraisal may be requested by the insurance provider if you are looking for coverage for a vehicle worth over $100,000 in some cases.) In fact, in many cases, the value of the vehicle appreciates annually, which is only appropriate; age is actually an asset for classic cars, after all. Therefore, with agreed value, should anything happen, you will receive the true, expected value from your insurer.

Agreed valuation policies for classic, vintage and antique vehicles generally entail some understandable restrictions. With most of these types of policies, mileage is restricted to a certain quantity, although not always – Grundy Worldwide, for example, advertises “no mileage restrictions.” Flexible mileage plans are often available, which allow you to receive a policy and premium attuned to the exact amount of mileage you expect. Most of these policies also stipulate that, when not in use, your classic vehicle is kept in an enclosed garage. You’ll also generally need proof of a regular-use vehicle under a standard auto insurance policy, which is the insurance providers’ way of making sure that your classic vehicle is being treated as such.

Agreed valuation is almost exclusively provided by classic car insurance specialists, so it’s worth considering one of these companies if you’re not already using them. They’ll insure your classic car at a much lower cost, while providing much more appropriate coverage, including a proper system of valuation.

Posted: August 7th, 2009 under Classic Car Insurance Explained.