If you have a “special” or classic car, you might think that you are protected against loss or damage because you have a “full coverage policy”. YOU DO NOT! If your beautiful 1985 Mercedes 300 SD Turbo Diesel is stolen or totaled you will only get book value. Maybe $1400-$1500. Obviously this car can be worth much more if fully restored. You can imagine the shock, sadness and horror when an unsuspecting car owner is confronted with this insurance scenario. Obviously book value policies usually don‘t cut it for specialty and older classic vehicles.
The next best option is a Stated Value Policy.
This is when value is stated by the insured when applying for a policy. Let’s say $10k.
If a loss occurs, a Stated Value Policy pays up to $10k. However, the insurance company is only required to pay Actual Cash Value (ACV), whichever is less. In other words if a market indicates $3k for the vehicle, that’s all you are going to get! Again, not an ideal outcome. More tears and gnashing of teeth! If you go to court demanding $10k, you may or not prevail.
With an Agreed Value Policy the insured is covered for an agreed amount, $10k, even if ACV is less. An Agreed Value Policy is the best policy for certain specialty or classic cars. Agreed Value Policies are better policies and because of this, they are more expensive than Stated Value Policies. Do your homework; get the correct policy! The insurance company must pay; they’ll be the ones crying!
