There’s more than one option for insuring vehicles. In some cases, owners will want to consider an option that’s known as agreed value coverage. While not the best choice in every case, it’s worth thinking about. If someone has suggested that one or more of your vehicles should be covered with the use of agreed value car insurance, talk with an insurance professional. During the course of the conversation, make sure to ask these four questions.
What is Agreed Value Car Insurance?
This form of auto insurance coverage focuses on determining a value that will be used as the payout in the event that the vehicle is totaled. Both the vehicle owner and the insurance provider must agree on that total.
This is different from what is sometimes referred to as the cash value approach. With the latter, current market value would determine how much the insurer would allow for repairing the damaged vehicle or allow to replace a totaled vehicle. If you have agreed value car insurance, the amount you will receive when the car is totaled is already fixed and not subject to the current market value.
Do Insurers Require the Vehicle to Be Appraised?
In order to secure this type of insurance coverage, the vehicle must be appraised by a certified professional. That professional must be recognized by the insurance provider. It’s not unusual for providers to supply a listing of local appraisers who are known to and approved by the insurance company.
This does not mean you must select an appraiser from the list. Many providers will accept appraisals from other qualified professionals. You would need to check with the provider first and make sure appraisals done by a specific company would be acceptable for determining the agreed value.
Keep in mind that this does place a limit on the amount of insurance you can establish. However, you are not required to set the agreed value for the maximum limit. You can seek to set the agreed value for an amount less than the appraised value. As odd as that may seem on the surface, this is a strategy that works for some people.
Who Should Consider Purchasing Agreed Value Car Insurance?
This form on car insurance is not recommended for those looking to insure the vehicles they drive on a regular basis. The more traditional cash value insurance will suffice. Consumers who are most likely to benefit from agreed value coverage are owners of classic, vintage, and modified vehicles.
These are the types of vehicles that are most likely to be worth more than the book values that provide the basis for other types of auto insurance. You can easily obtain quotes for each type of auto insurance and see the difference in terms of your coverage and payout.
How Does a Provider Determine the Rates for Agreed Value Car Insurance?
One of the aspects of agreed value car insurance that sometimes throws consumers is the fact that not all providers use the same approach to determining what they consider to be an agreeable value. You could conceivably seek quotes from two different providers and find that each one is open to a different maximum value.
Even so, there are some factors that are highly likely to impact those figures. If you agree to drive the covered vehicle less than a certain amount of miles per year, you may receive a discount. Confirming that the vehicle is only driven for pleasure and not for daily commutes is also likely to impact the cost. Where you store the vehicle is also important; it must be a private location rather than a public one. In fact, many providers won’t even discuss the idea of agreed value coverage unless you have private storage.
Would agreed value coverage be right for you? Talk with a professional and find out. If so, locate a reputable appraiser and secure the necessary detailed evaluation. From there, you can begin to shop for coverage that fits your needs.