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 57 Chevy convertible is stolen or totaled you will only get book value. Maybe $400-$500. Obviously this car can be worth north of $100k. 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 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 $100k.
If a loss occurs, a Stated Value Policy pays up to $100k. However, the insurance company is only required to pay Actual Cash Value (ACV), whichever is less. In other words if a market indicates $40k 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 $100k, you will lose.
With an Agreed Value Policy the insured is covered for an agreed amount, $100k, 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!
