Agreed Value vs. Stated Value for High Lux Vehicles

Agreed Value - blog picSince 1924, the company where I’m employed has been providing service for individuals to purchase and maintain their luxury vehicles. As the on-site Risk Manager/Insurance Agent for the Clearwater campus, I have uncovered a serious gap in most of my client’s auto insurance that can have detrimental consequences in the event of a serious claim.

Actual Cash Value

Actual Cash Value is the process your typical auto insurance company uses to pay a claim if your vehicle is seriously damaged or totaled. Actual Cash Value is also known as Market Value, and by definition, is the standard that property & casualty companies use to pay a claim by subtracting depreciation from the replacement cost. The key word here is depreciation – an adjuster uses this “wear & tear” equation in their claims process; and it’s not designed to benefit the policyholder! Owners have to somehow prove to the adjuster that their auto was better maintained in order to receive a higher payout, and in my experience…best of luck trying to accomplish that!

Big insurance companies that have the catchy jingles and funny commercials do not have the staff, know-how, or desire to properly insure exotic and specialty vehicles properly. Reference my last blog post here: regarding the severe limitations placed by your standard auto insurance provider.

Agreed Value

The only legitimate solution to the Actual Cash Value problem is to get away from the standard insurance company idea, and move your assets that are to be protected to a premium insurance provider. A premium insurance company can offer an ultra-luxury car owner Agreed Value. This is a value set to a dollar limit in case of a serious loss to the auto – no depreciation, no “wear & tear”, just an agreed upon value to be paid out in full. Obviously, the premium will be higher for this type of protection in the policy, but it eliminates the guesswork as well as the risk of potentially losing tens or hundreds of thousands of dollars from a sub-standard claims process.

A premium insurer isn’t in the business of over-or-under-insuring a vehicle in an Agreed Value policy. In order for an applicant to get to the Agreed Value, underwriting will confirm a price before the policy is issued. I always stress the importance of an Agreed Value policy with a premium insurer to clients that purchase and drive exotic, ultra-lux vehicles, and am taken aback by how many drivers are completely unaware of the serious gap in their policy.

Stated Value

Stated Value is a wolf in sheep’s clothing. Some of your “friendly’” neighborhood insurance agencies offer this coverage for your ultra-lux vehicle – but guess what?? Stated Value is worse than Actual Cash Value.

For an ultra-lux car owner, the big auto insurance companies aren’t equipped (nor do they want) to deal with large claims from a six-figure vehicle being totaled. If Stated Value is mentioned in an auto policy, check the fine print! This could mean they payout is even LESS than the Actual Cash Value. Read the payout clause of the policy carefully.

Just having an insurance policy does not give someone the proper protection for their assets, especially in the ultra-luxury market. I make it a point to speak with any of our clients that drive exotics to know the difference between Actual Cash Value and Agreed Value in an auto policy. We’re talking a gap in coverage of six-figures in the event of a total loss. Buyer beware.


For additional questions or comments, please contact me at Dimmitt Insurance

Nick Noreika, Risk Management Specialist

Main 727.797.9730

25191 US Hwy 19 N

Clearwater, FL 33763

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