Skip to Main Content

Agreed value insurance

ftwitty/Getty Images
Bankrate Logo

Why you can trust Bankrate

While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for . Our content is backed by, LLC, a licensed entity (NPN: 19966249). For more information, please see our

When you have a car insurance claim for physical damage to your vehicle, your insurance company reimburses you for the loss, minus your deductible. However, your payout depends on the type of insurance policy you have.

With agreed value insurance, your insurer will compensate you based on the value of your vehicle that you and the company agree to when you purchase coverage. The agreed value is based on a few different factors and may be limited to specific vehicle types.

How does agreed value insurance work?

With an agreed value insurance policy, you and your insurance provider come to an agreement on how much your vehicle is worth, which is the maximum amount of money the insurer will pay after a covered loss. If you have a claim, you are entitled to either the full amount required to fix the car or the agreed-upon value.

Agreed value insurance policies are not particularly common. They are often used when insuring a classic car, an antique car or a vehicle that is expected to appreciate over time rather than lose value.

The process of getting agreed value insurance is slightly different from getting a standard actual cash value (ACV) or stated value policy. You will need to provide a statement of property value, which indicates how much your vehicle is worth and why the value is justified.

Premiums for agreed value insurance policies are typically more expensive than an ACV car insurance policy. Here are some of the factors that car insurance companies look at to determine the cost of agreed value insurance:

  • Your vehicle: The specifics of your vehicle, like the age, make and model will impact the cost of agreed value insurance.
  • Your mileage: If your vehicle is used as a daily driver, your agreed value insurance premium will likely be more expensive due to the increased risk of a claim.
  • Where the vehicle is stored: Storing your vehicle in a garage may help keep your premium lower than if you park your car in an uncovered driveway.

Who should consider agreed value insurance?

Agreed value insurance is not right for everyone. It can be a good option if you want to insure a classic car, a collector car or a customized vehicle. If your car’s value cannot be easily pulled from a site like Kelley Blue Book or Edmunds, you might want to consider an agreed value policy.

One of the biggest benefits of an agreed value policy is that you can get a higher amount of coverage for your vehicle. Agreed value insurance does not factor in depreciation, which can result in a lower payout following a claim.

However, a drawback of agreed value insurance is that the premium tends to be more expensive due to the fact that you are paying for a higher level of coverage. However, because you are entitled to a much larger payout after a claim, the higher premium may be worth it, especially if your vehicle would be difficult to repair or replace out of pocket.

Agreed value versus other insurance policies

Most auto insurance policies reimburse you after a loss based on your vehicle’s stated value or ACV. While these types of policies offer lower payouts, they are usually less expensive than agreed value policies. Here are the differences between these kinds of insurance:

Agreed value vs. stated value

Agreed value and stated value sound similar, but they are very different. With a stated value policy, you as the policyholder get to determine — or state — how much your vehicle is worth. The insurance company will ensure that the proposed value is within a reasonable range and may ask for proof to back up the amount. However, unlike an agreed value policy, there is no guarantee that you will receive the full stated value after a claim.

Like an agreed value policy, stated value policies are often used to insure classic cars, collector cars and modified cars that have a high value. The premiums tend to be slightly less expensive than agreed value insurance because your payout after a claim will vary.

Agreed value vs. actual cash value

Actual cash value (ACV) is the standard reimbursement method for a regular car insurance policy. It is the value of your vehicle at the time of a loss, which includes depreciation. Your insurance company determines the ACV of your vehicle when you purchase a policy based on the age, mileage, make, model and other vehicle-specific factors. The value determined is largely out of your hands, although you could request a reevaluation if you feel the vehicle is worth more.

The biggest benefit to an ACV car insurance policy is that the premiums are generally the most affordable. On the other hand, your payout will often be much lower than that of an agreed value insurance policy. An ACV policy is sufficient for most regular vehicles, but it may not offer enough coverage if you have a classic car or antique vehicle.

Frequently asked questions

What is the best car insurance company?

The best car insurance company depends on a variety of factors, including where you live, what type of car you drive, how much you want to spend, what discounts you qualify for and what you value in an insurance company. To find the best provider for you, shop around and compare several companies using your personal criteria.

How much does agreed value insurance cost?

The cost of agreed value car insurance is different for every individual. The national average car insurance premium is $1,674 per year for a full coverage policy. Because agreed value insurance policies tend to be more expensive than standard policies, you should expect to pay more than average. However, your premium will depend on things like your location, claim history and the specifics of your vehicle.

Is replacement cost value the same as agreed value?

The replacement cost value of your vehicle is not the same as the agreed value. After a claim, a replacement cost value (RCV) policy will compensate you based on the value of your vehicle in its original condition, which does not factor in depreciation or any appreciation that may have occurred with upgrades and modifications. Unlike agreed value, your insurance company determines the replacement value of your car. Both of these policies are usually more expensive than a standard ACV policy.

Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth Rivelli is a contributing insurance writer for Bankrate and has years of experience writing for insurance domains such as The Simple Dollar, and NextAdvisor, among others
Edited by
Insurance Editor