What is agreed value and why does it matter?

If you end up having an accident and your car is written off, or your car gets stolen and can’t be recovered, the agreed value is the amount you would be paid, less your excess (and salvage if being retained) when you make a claim.

On a technical level, agreed value means that the insurer has agreed the value of your vehicle and set it within your policy. Should a total loss of your vehicle occur, the value has been contractually agreed between you and the insurer.

How is agreed value determined?

Agreed value is ascertained and agreed upon by an insurer based on a car’s heritage, condition and rarity. Most insurers will ask for independent valuations from approved professionals or from car clubs, and sometimes ask for a self-valuation form. The valuation request will usually need to be supported with photographs of the vehicle, including front, back, each side, the interior and the engine bay.

Insurers will always be looking for the value of the vehicle to be reflective of its peers. If you are asking for a value much higher than is commonly seen for your type of vehicle, then insurers will often ask further questions; for example, does your vehicle have racing pedigree? Was it owned by someone famous?

Some insurers will use past auction results and sale prices as guidelines for agreed value and look at market trends for your specific vehicle.

What if I don’t have agreed value?

Standard car insurance policies usually pay out on the market value of the vehicle at the time. This is still open to interpretation, but more often than not comes down to the cost of replacing that particular make and model with a like for like vehicle. The market value can be affected by a number of factors, and the rarity of a vehicle is not always a consideration.

With classic cars and bikes, there’s much more fluctuation in the market and values are often harder to determine. This means that without an agreed value policy, you may lose out on the true value of your vehicle when it comes to a claim.

Classic cars are particularly at risk without an agreed value policy. Rarity, heritage and pedigree contribute to the value of a classic car, but in the event of a write-off an engineer only looks at the cost of replacing the metal. For example, an E-type known for winning races cannot have its heritage replaced, but is worth more to a buyer than a standard E-type. The engineer will only see the value of the car as if replacing it with another similar age, condition, and colour E-type.

Can I adjust my agreed value during my insurance policy term?

Your agreed value can be changed mid-term, or if you don’t have agreed value you can even get it agreed after your policy has been put in place. To change the value of your vehicle you would need to produce further photographs, even if already provided when it was first agreed, and a new independent valuation.

You should inform your insurance company as soon as possible if your value needs to be increased. If you regularly make modifications or upgrades to your classic car, the value at which you insure your vehicle should be maintained at the correct level throughout the policy.

What costs are involved with agreed value?

Insurers do not charge for agreed value as the process of adding this cover to your policy is simple and most insurers are happy to come to an agreement on it. If you are being charged then it will be the cost of producing new documents and issuing them to you from your insurance broker/provider. We do not make any charge for agreed value.

Can we help you?

If you have a question about agreed value or your classic car insurance generally, we’re here to help – just send us a message below and we’ll give you a call.