If you own a classic or luxury car, then you might want to opt for an agreed value car insurance policy. One thing you should know is that this option is not for all cars. If your car is worth way more than an average car, then go for it.
Agreed value car insurance is a term used to describe an insurance policy where both parties – the insured and the insurer – reach an agreement on the value of your vehicle. Once an agreement is reached, the car will be insured for the agreed amount. No matter the circumstances, you will never get a higher amount than what was initially agreed upon. So, if you’re involved in an accident where the car is a total write off, then you will get compensated for the insured amount and nothing more. Conversely, the standard car insurance policy will only compensate you on the current resale value of your vehicle at the time of the accident. It is obvious that an agreed value car insurance makes a whole lot of sense, hence a great option for luxury and classic cars that are not so popular on the market.
Features of Agreed Value Car Insurance Policy
The highest compensation you can get when you opt for agreed value coverage is the amount agreed upon prior to signing the policy. And if any adjustment will have to be made, it will only be done when you want to renew your policy. So whether the vehicle’s market value appreciates or depreciates, you will only get the agreed amount on the policy. Here are some of the unique features of agreed value car insurance
- You need not worry about depreciation
- A higher agreed value means a more expensive premium. While a lower agreed value will lead to lower premiums
- Agreed value coverage can be used on any car but it is best suited for luxury and classic cars.
- This policy is not devoid of all insurance terms and conditions. Just because you’ve paid for a higher agreed value doesn’t necessarily mean you will be able to claim it.
When Is an Agreed Value Policy a Good Idea
Not all car insurance companies offer this kind of policy. Likewise, it is not suited for all kinds of cars. However, there are situations when an agreed value policy is always a good idea.
- Modifications and adding a few extra features on a car will raise its market value to a greater extent. If you opt for the standard insurance policy, the price of the added features may not be included when you file for compensation in the event that the car gets totaled after an accident.
- Ideal for those who have luxury, classic or high powered vehicles
- If your vehicle is financed by a car loan, then an agreed value car insurance is the best option to go. This policy protects not just the car and its value but also covers the outstanding loan. If you are involved in an accident, you won’t have trouble getting a new car and offsetting your outstanding car loan.
