Classic and collector cars can be insured a few different ways, but the best way to make sure you get enough money to repair or replace your vehicle after an accident is to buy agreed value car insurance.
Agreed value car insurance means that you and the insurance company will agree on the value of your car ahead of time, and then if it’s totaled, you’ll be paid the full amount you agreed on at the start of the policy. Since classic cars don’t depreciate like regular cars, they shouldn’t be insured with regular policies that pay out the actual cash value (ACV) in the event of a total loss.
How does agreed value insurance work?
Agreed value insurance allows the vehicle owner and the car insurance company to come to an agreement on how much a vehicle is worth and set that as the maximum amount of money the insurer will pay after a covered loss. You’ll need to prove why your car is worth what you say it is by providing receipts, appraisals, and other documentation — or you can expect the insurance company to send out an appraiser to verify your car’s value.
Say you take out an agreed-value policy for your restored 1967 Ford Mustang
At the start of the policy, you and the car insurance company determine that the car’s agreed value is $85,000
If you have a fire in your garage and the Mustang is a total loss, your car insurance will pay you that $85,000, the amount you’re paid won’t go down over time like with a regular car insurance policy
One of the great things about an agreed value policy is that it gives you a chance to explain why you think your car is worth a certain amount of money. If you have put years of time and effort into restoring a classic car, you can tell the insurance company that when you explain why you think your car should be insured for more money.
If you can show years worth of documentation of the work you’ve done, you may be able to make a case for having a higher agreed value on your policy.
With an agreed value insurance policy, if you have a total loss claim you are entitled to 100% of the agreed amount. That’s different from a regular car insurance policy, which pays out the actual cash value (ACV), which usually goes down as your car ages.
Who needs agreed value insurance?
Agreed value insurance is a good idea for drivers who have classic, collector, or antique vehicles that don’t depreciate in value like other cars.
Agreed value coverage is also available with some other types of insurance, like boat insurance and commercial property insurance, for people who want to protect their property for a specific dollar amount.
Agreed value vs. actual cash value
Actual cash value means you will get paid what your car is worth on the open market; ACV is how most car insurance claims are reimbursed. Usually the ACV is lower than what you paid for your vehicle, but not always.
For instance, in 2021 and 2022 there was a shortage of new cars, which caused the value of used cars to go up. During that time, car insurance companies were paying higher claims for used vehicles because of the increased cost to repair or replace a car.
ACV car insurance policies are generally the most affordable type of car insurance coverage, but they may not offer enough coverage if you have a classic car, collector car, or other antique vehicle.
Agreed value vs. stated value
Agreed value and stated value are different types of insurance. A stated value policy lets the policyholder determine how much their vehicle is worth. The insurance company then double checks the stated value before selling the policy, but any claim that gets filed later will be processed based on the stated value or the actual cash value, whichever is lower.
Stated value policies are a little cheaper than agreed value policies because the potential claim payout will be lower, so keep that in mind when considering a stated value insurance policy.
Can you get agreed value coverage for a daily driver?
Maybe, but that’s not generally the purpose. Agreed value coverage is for cars that will retain a consistent value, which is usually classic or collector cars. They may even go up in value as they age, in which case you could adjust your agreed value coverage. But regular cars that you use as a daily driver, meaning cars that you drive to work or school, often lose value over time.
Using a car for a regular commute and in daily life means it will experience wear and tear over time, from weather, dings and scratches, and just general use. If your daily driver is totaled, it may be worth less at the time of the accident than it was when you first took out your policy, so the ACV payment will reflect that.
But you can always discuss it with your car insurance company if you’re interested in an agreed value policy for a car you drive every day.
Agreed value car insurance companies
There are several insurance companies that specialize in providing agreed value car insurance for classic and collector cars, including:
Heacock Classic Insurance
Most car insurance companies that sell classic car coverage offer agreed value car insurance policies. Some big insurance companies, like GEICO and State Farm, also offer agreed value car insurance policies as one of the many types of coverage they have available.
Other large insurance companies may offer agreed value classic or collector car coverage by partnering with a classic car insurance company. For example, Progressive offers agreed value car insurance for classic cars through Hagerty.