When you’re looking to insure your classic car, it’s important to know the differences that exist between the types of valuation insurance companies offer. Depending on condition and the usage of your vehicle you could be greatly under-insured should something befall your four-wheel treasure. Most importantly, you should know the differences between actual cash value, stated value and agreed value.
Actual Cash Value
Actual Cash Value is the valuation process used on your everyday auto insurance and pays out based on the ‘book,’ or depreciated value of the vehicle. As such, you’ll likely want to avoid ACV when it comes to classic car insurance unless you’re content with a payout value that’s often significantly less than the vehicle’s actual value.
Stated Value can be a little tricky. This type of policy allows you to save money on premiums by accepting an insured lesser value for the vehicle. So, if the premium is too much for the $250,000 Lamborghini you just bought, you can save money on premiums by only insuring the value of the vehicle up to, say, $150,000. Stated Value policies also will often contain a clause that allows the insurance company to pay based on which ever is the lesser amount between the stated value and the actual cash value.
Agreed Value’s definition is short and sweet. You and your insurance company simply come to an agreement on the value of the vehicle. In the event that the vehicle is damaged or destroyed, the insurance company pays out the agreed upon value – no more, no less. This type of insurance may not be available through the same insurer as your everyday driver insurance, so be sure to explore the types of policies your current insurer offers.
There are many other factors that you’ll need to explore when it comes to selecting the proper insurance policy for you, but discussing the type of valuation your insurer offers should be near the top of the list.