Agreed Value vs. Stated Value: The Definitive Guide to Insuring Classic Cars

Owning a classic car is not just about transportation; it is an investment of passion, time, and money. Whether it’s a ’69 Mustang, a vintage Porsche, or a restored pre-war Ford, your collector vehicle has a value that goes far beyond a Kelley Blue Book listing. However, many owners make a critical mistake: they simply add their prized vehicle to their standard daily driver auto insurance policy.

This is a dangerous gamble. Standard auto insurance policies are built on the concept of Actual Cash Value (ACV), which factors in depreciation. But classic cars don't depreciate like a Honda Civic; they often appreciate or hold a stable, high value due to restoration and rarity. If you insure a classic car on a standard policy and it gets totaled, you might receive a check for a fraction of what the car is actually worth.

To properly protect a collector vehicle, you need specialized insurance. But even within that niche, there is a confusing terminology trap: the difference between "Agreed Value" and "Stated Value." They sound similar, but in the event of a claim, the difference can be tens of thousands of dollars. This guide will break down these two valuation methods, explain why one is superior, and help you secure the right coverage for your masterpiece.

The Standard Trap: Actual Cash Value (ACV)

First, let's establish what you want to avoid. A standard auto policy uses ACV.

• How it works: The insurer looks at the market value of a "used car" of that age and subtracts depreciation.
• The Result: A 1960s muscle car might be valued as simply an "old car" by standard algorithms, ignoring the $50,000 you spent on a frame-off restoration. This is why specialty insurance exists.

Stated Value: Better, But Not Best

"Stated Value" is often misunderstood. Many owners believe it guarantees they will get the amount they state the car is worth. It does not.

• Definition: Stated Value allows you to tell the insurance company what you think the car is worth (e.g., $40,000). This determines your premium.
• The Catch: The policy language typically says the insurer will pay the "lesser of" the Stated Value OR the Actual Cash Value.
• The Scenario: You state the value is $40,000. The car is stolen. The adjuster determines the ACV is actually only $25,000. Because the policy pays the lesser amount, you get $25,000.
• The Purpose: Stated Value is really designed to protect the insurance company from paying too much on a car that might be overvalued by the owner, not to guarantee a payout to the owner.

Agreed Value: The Gold Standard

Agreed Value (sometimes called "Guaranteed Value") is the coverage every classic car owner should demand.

• Definition: You and the insurance company agree on the value of the car upfront, before the policy is written. This usually requires submitting photos and a professional appraisal.
• The Guarantee: Once that number is agreed upon (e.g., $50,000), it is locked in. If the car is a total loss, the insurance company writes you a check for exactly $50,000. No depreciation. No haggling. No "lesser of" clauses.
• The Benefit: This is the only way to ensure your financial investment is 100% protected. If the market value of your car increases, you can work with your insurer to adjust the Agreed Value upwards.

Other Critical Features of Classic Car Insurance

Beyond valuation, specialty policies offer features tailored to the collector lifestyle:

1. Flexible Usage: Standard policies assume daily driving. Classic policies often have mileage limits (e.g., 2,500 miles/year) but allow for "pleasure use" like car shows and club drives.
2. Spare Parts Coverage: Restoring a car means having a garage full of expensive parts. Specialty policies often cover these parts (up to a limit) even if they aren't attached to the car yet.
3. Restoration Coverage: If your car is currently being restored, its value increases as work is done. Some policies automatically increase the insured value by a certain percentage during the restoration process.

Conclusion

Your classic car is unique, and its insurance needs to be equally specialized. Do not let an agent talk you into a "Stated Value" policy under the guise that it's the same thing as "Agreed Value." It isn't. When shopping for coverage, ask specifically for an Agreed Value policy. It might cost slightly more (though often, specialty insurance is surprisingly affordable due to low mileage), but it guarantees that the passion and money you’ve poured into your vehicle are truly protected.