Agreed value insurance

What is agreed value coverage?

If your car is rare, restored or just plain special, its true worth might not be captured by everyday pricing guides. That’s where agreed value coverage comes in. With this type of insurance, you and your carrier decide upfront how much your vehicle is worth, and that’s the amount you’ll receive if it’s totaled or stolen. No guessing, no depreciation and no last-minute surprises.

Unlike standard policies that pay out based on market value, agreed value coverage locks in a fixed dollar amount. That means more control, more peace of mind and potentially a higher payout for claims.

Agreed value vs stated value

It’s easy to confuse agreed value with stated value, but the two work very differently when it comes to payouts.

With agreed value, you and your insurance company settle on a specific amount at the start of the policy. That amount is guaranteed in a total loss claim. With stated value, you suggest a value to insure your vehicle, but the insurer may pay less than that amount if the actual cash value is lower when a claim is filed.

So, while both involve assigning a value to your vehicle, only agreed value guarantees you’ll receive that number.

How does agreed value coverage work?

Agreed value coverage takes a little extra effort upfront, but that work pays off in a big way if you ever need to file a claim. You’ll start by working with your insurer to set the car’s value, usually based on documentation like appraisals, restoration records and photos. Once approved, that number becomes the fixed payout if your vehicle is declared a total loss.

Here’s how the process typically works:

• You submit documentation – This might include a certified appraisal, detailed photos and records of upgrades or restorations.
• The insurer reviews and confirms a value – After evaluating your materials, they agree on a payout amount for total loss claims.
• You lock in that value for your policy term – Usually 12 months, though it may be reassessed at renewal if your car appreciates or changes significantly.

When your car is totaled or stolen and unrecoverable, you’ll receive that full, agreed-upon amount without any deductions for depreciation.

What does agreed value cover?

Agreed value coverage is designed to protect you in worst-case scenarios when your car is completely destroyed or stolen. It doesn’t replace your standard policy but works alongside it to make sure you’re properly compensated if the loss is total.

Situations typically covered include:

• Theft – If your car is stolen and not recovered, you’ll receive the full agreed value.
• Total loss from an accident – When repair costs exceed the car’s agreed value, your payout is guaranteed.
• Natural disasters – Fire, flood or other severe weather events that destroy your vehicle are covered under this policy.

However, it’s important to know what isn’t covered:

• Partial or cosmetic damage – Standard collision or comprehensive coverage handles these claims.
• Wear and tear or mechanical issues – These aren’t covered by any auto policy.
• Unlisted custom parts or accessories – If it wasn’t included in the documentation, it won’t be factored into the payout.

Understanding these limits helps you avoid surprises and make sure your car is fully documented before a loss happens.

Who should consider agreed value insurance?

Agreed value insurance is a smart choice if your car has value that isn’t easily captured by standard pricing guides. If your vehicle is unique, heavily customized or simply irreplaceable, this type of coverage offers the protection you need.

You may want to consider agreed value if you own:

• Classic or antique cars
• Customized vehicles with performance or cosmetic upgrades
• Rare or collectible models
• Vehicles with sentimental or investment value

If you’ve spent years restoring your ride or it holds memories and meaning you couldn’t put a price on, agreed value coverage helps protect that investment.

What are the benefits of agreed value coverage?

Agreed value policies give you something most insurance plans don’t, and that’s certainty. When you’ve poured time, money and love into a car, you want to know it’s fully protected, no matter what happens.

Here’s what makes this type of coverage stand out:

• Predictable payout – You know upfront how much you’ll receive in a total loss.
• No depreciation – Your payout won’t drop with age or mileage.
• Tailored protection – Great for cars that fall outside typical valuation tools.
• Peace of mind – You won’t have to fight over value after a loss.

Yes, the premium is often a bit higher, but for many car lovers, the added protection is worth every penny.

When would agreed value come into play?

Agreed value coverage isn’t something you’ll use every day, but when you need it, it matters. It comes into effect when your car is declared a total loss, either because it’s too damaged to fix or it’s stolen and not recovered.

Examples include:

• Severe collision – Repair costs exceed your car’s agreed value.
• Fire or flood – The car is destroyed beyond repair.
• Theft – Your vehicle is stolen and never returned.

In these cases, your insurance company doesn’t look at mileage or market fluctuations, they simply pay out the agreed amount listed in your policy.

Market value vs agreed value: what’s the difference?

It all comes down to control. With market value policies, the payout is based on your car’s depreciated value at the time of loss. That number changes with time, mileage and even supply and demand, and may fall short of what your car is actually worth to you.

Agreed value, on the other hand, is locked in when the policy begins. You and your insurer agree on the number, and that’s what you get if your car is totaled. No surprises. No negotiations.

If your vehicle is one of a kind, or simply means more to you than a book value shows, agreed value is the safer choice.

How does an insurance company agree on the value?

To set an agreed value, your insurance company will ask you to provide documentation that supports your car’s worth. This helps both sides feel confident in the number that’s ultimately locked into the policy.

You may need to submit:

• A certified vehicle appraisal
• Photos of the interior and exterior
• Receipts for custom parts or restoration work
• Maintenance records and mileage history

Insurance companies may also reference auction results, collector car databases and other sources to confirm fair value. Once everything checks out, the amount is added to your policy and may be updated at renewal if your car’s value changes.

What documents or appraisals do you need?

Getting agreed value coverage means doing a little prep work. The better your documentation, the more accurate and often higher your agreed value will be.

You’ll likely need to provide:

• A recent appraisal from a qualified classic car expert
• High-resolution photos of your car’s current condition
• Invoices for any custom work, restorations or rare parts
• Maintenance logs or service history

One of the most important pieces is a statement of values, which clearly outlines your vehicle’s worth based on all submitted materials. This helps prevent disputes and means that your policy reflects your car’s true value.

Understanding policy provisions

Policy provisions are the fine print of your insurance policy, but they’re anything but boring. These terms explain what’s covered, what’s excluded and what your responsibilities are as the policyholder. Knowing how these details work can save you from major headaches later.

Some common provisions include:

• Coverage limits – The max amount your policy will pay.
• Deductibles – What you pay out of pocket before insurance kicks in.
• Coinsurance clauses – Sometimes used in high-value policies, this means you’ll share a portion of costs if a loss occurs.

One key provision in agreed value coverage is the agreed value clause, which officially locks in the payout amount. To support this, your insurance company may require appraisals or receipts to justify the figure.

Always review these sections carefully and ask questions if anything is unclear.

Can you combine agreed value with other types of coverage?

Yes, agreed value is often part of a broader auto insurance package. It works alongside other coverages to give you full protection for different types of risks.

Here’s how they typically work together:

• Liability – Covers injuries or damage you cause to others.
• Collision – Pays for damage to your car in an accident (non-total loss).
• Comprehensive – Covers damage from fire, theft, animals or natural disasters.
• PIP/MedPay – Covers medical expenses if you’re injured in a crash.
• Uninsured or underinsured motorist – Steps in if the other driver doesn’t have enough coverage.

Just remember, agreed value only applies to total losses. For anything less than that, your standard policy and deductibles still apply.

Some insurance companies also have rules, like requiring garage storage or low annual mileage, for agreed value eligibility.

Does agreed value coverage change over time?

It can. If your car becomes more collectible or you make upgrades that raise its value, your agreed value should be updated. This helps make sure you’re never underinsured if the unexpected happens.

You should reassess your agreed value if:

• Your car’s market value increases
• You add new features or customizations
• You complete a full or partial restoration

It’s a good idea to review your documentation at every renewal and talk to your carrier about any changes.

Does agreed value cost extra?

Usually, yes, but that cost buys you clarity and confidence. Because agreed value policies lock in a higher payout with no depreciation, the premium tends to be higher than standard market value coverage.

That premium typically includes:

• A custom valuation process
• Guaranteed payout for total loss
• Protection for specialty or rare vehicles

You may also need to pay for an independent appraisal or updated photos during the application process.

Still, for many classic car owners, it’s a worthwhile investment, especially if you’ve put a lot of time, money or passion into your vehicle.

How do I know if agreed value is right for me?

If your vehicle is one of a kind, or holds value that the market doesn’t reflect, agreed value coverage is worth a close look. It’s especially helpful if a depreciated payout wouldn’t come close to replacing what you’ve built.

Ask yourself:

• Is this car difficult or impossible to replace?
• Have I invested significantly in upgrades or restoration?
• Would a market-value payout leave me short?

If you answered yes to any of those, it’s time to talk to a VIU by HUB Advisor. They’ll help you review your coverage options and make sure your vehicle and your investment are protected.