Agreed value car insurance
If your car is more unusual, an agreed value policy can pay out an amount you agree with your insurer instead of the market value.
What is an agreed value?
The agreed value is the amount that you and the insurer agree your car is worth when you take out an agreed value policy.
Your insurer will pay out this agreed amount if your car is written off or if it’s stolen and can’t be recovered.
Alternatively, with standard car insurance, any claim for a total loss would be settled using the current market rate for the car at the time of the claim.
So, if you don’t have an agreed valuation, you could lose money if insurers don’t have accurate values for cars that are the same as yours.
Key points
- At the start of your policy, you’ll agree your car’s value with your insurer. You’ll be compensated with this amount if your car’s written off or stolen
- It’s mainly used for unusual or classic cars, but also for some modified and new cars
- You’ll need to prove the car’s value using evidence like photographs and invoices. You may also need a professional valuation
- Agreed value policies are usually more expensive and harder to find than market value policies
What is an agreed value?
The agreed value is the amount that you and the insurer agree your car is worth when you take out an agreed value policy.
Your insurer will pay out this agreed amount if your car is written off or if it’s stolen and can’t be recovered.
Alternatively, with standard car insurance, any claim for a total loss would be settled using the current market rate for the car at the time of the claim.
So, if you don’t have an agreed valuation, you could lose money if insurers don’t have accurate values for cars that are the same as yours.
Who are agreed value policies for?
Agreed value policies are mostly used for classic cars, vehicles appreciating in value, or more unusual models where it’s harder to determine the market value.
That’s because certain cars, like those with unusual specifications or refurbished models, can have added value that a market rate won’t take into account.
If it’s a good example of its type, your car could fetch well beyond the market price - so having an agreed value instead of a standard market value policy can help cover this.
You might also consider an agreed value policy if you own a high performance car.
Some insurers even offer a new replacement car service if the car is less than 12 months old, so it’s worth checking the policy details.
How does it work?
With an agreed value policy, you and your insurer will decide on the payout amount you’d receive if the car is stolen or written off after an accident.
The agreed value is usually higher than the estimated market value.
However, you’ll need evidence to prove what the car is worth when you take out the policy. And the premium you’ll pay will be higher than with standard cover.
If you need to make a claim for total loss, you’ll receive the agreed amount.
But if the car’s value has increased since you took out cover, you won’t receive more than the agreed value written in the policy.
As car values can fluctuate, you should check and adjust the agreed value when you renew.
How to get an agreed value car insurance policy
Agreed value policies are much less common than market value policies. In fact, we checked 344 comprehensive insurance policies on Defaqto, and just 2% offered agreed value cover as standard - a further 6% offered it as an optional extra.[1]
This means you may need to shop around with individual specialist providers to find the best deal or use a broker - but you can still compare policies online.
If you’re a member of a classic car club or an owners’ club, you may be able to get a valuation from them as well as a discount with certain insurers.
Insurers won’t always agree with the value you say your car’s worth so they may counter with a lower amount.
However, you’ll be best placed to know the value of your car, particularly if you’ve done work on it - so if you’re not happy with the first quote, compare it against other insurers.
Which cars can be covered?
You can get agreed value insurance for a wide range of cars, including:
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Classic and vintage cars
Their market value can be low compared to how much it might cost to repair or replace one of a similar condition or rarity
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Performance cars
An agreed value policy can take into account the pedigree and power of your car and any increase in its value
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Modified cars
Any modifications and extra features you add can increase your car’s value above the market price
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Refurbished cars
Only you’ll know the real effort and cost of refurbishing your car, so an agreed value can protect this
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Kit cars
As these aren’t run-of-the-mill cars, the agreed value can reflect the time you’ve put into assembling one
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Imported cars
If your car is more unusual and has been imported from abroad it may not have an obvious retail value in this country
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Collector cars
From customised campervans to iconic retro cars, normal market values won’t apply to collectible examples
Evidence of car value
To take out an agreed value policy, you’ll need to provide the insurer with evidence to prove your car is worth more than the market value.
The evidence you’ll need to supply varies between insurers, but it usually includes:
Photos of the car
This usually means providing several photos of the car, including the inside and outside, and images of the engine.
Receipts and documentation
You might also be asked for receipts or proof of car services and any repairs or restoration work done on the car. And you may be asked to show ads for similar cars on sale.
Independent valuation
Some insurers will also ask for an independent professional valuation - car clubs can sometimes provide this service.
Once the valuation has been agreed, you’ll get a valuation certificate. This is usually non-transferable, so if you change insurers, you’ll need to go through the process again.
How do I get an agreed value on my classic car?
Agreed value policies are difficult to find. We checked 325 comprehensive insurance policies on Defaqto, and just 2% offered agreed value cover as standard - a further 5% offered it as an optional extra.
If you’ve got a classic car, you’ll still need to provide the insurer with evidence like photographs and documentation for repairs.
But you may also need to get a valuation from an independent classic car expert appointed by your insurer.
Alternatively, you may be able to get an approved valuation, like one from a classic car club.
If you later make any refurbishments or changes to the car that affect its value, you’ll need to complete another vehicle valuation - but you’ll usually be charged for this.
When would you need an agreed value?
You’ll need an agreed value if your car is worth more than the average price for a similar age model or type.
If your car is rare or unusual, an agreed value will take into account the features, condition and pedigree which set it apart.
You’ll pay more in insurance premiums for the extra peace of mind, but the payout can help you buy a like-for-like replacement if you need to.
What are the pros and cons of an agreed value policy?
Pros
- An agreed value can take into account the time and money you’ve invested into a car
- You can claim for the full agreed value of your car if it’s stolen or written off
- You can get this type of cover for a wide range of cars and vehicles
- The payout can be enough to buy a replacement car of a similar value
- The agreed value is fixed for the policy term, so it won’t change if the car depreciates
Cons
- Agreed value premiums are usually more expensive
- If the car depreciates in value you may end up paying for more cover than you need
- Policies can be harder to find than market value alternatives
- You may have to pay for an independent professional valuation
The cost of agreed value policies
Agreed value policies are more expensive than standard cover. This is because insurers will end up paying more than the market value if you have to claim for a total loss.
Plus, as this type of policy is rarer there’s less competition between insurers. This keeps the premiums high.
However, if you’re a member of a car club you may be able to get a discount of up to 15% off your premiums.
And there are other ways to help lower your insurance costs - including building up a no-claims discount, improving your car’s security and keeping your mileage down.
But as your premiums will still be higher than a standard policy, you’ll need to weigh up whether your car is unique or valuable enough to justify taking out agreed value cover.
It may be worth also comparing standard market value policies to help you decide.
What’s the alternative to an agreed value policy?
If you own a car less than 10 years old, you could also consider guaranteed asset protection insurance (gap insurance) as an alternative to an agreed value policy.
This covers the difference between what your car insurer will pay out if your car is written off and the car’s market value when you bought it.
Alternatively, if you’ve got a classic car, you may want to think about taking out cover or extending your policy for business use. This means you’ll be covered if you want to use your car to earn some extra cash by using it for weddings or film and TV work.
Frequently asked questions
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No, the agreed value is a pre-agreed amount your car is insured for that takes into account factors like its rarity, and the costs of any refurbishment and restoration.
The replacement cost is how much it would cost to replace a written off car with a brand-new vehicle. This cover typically only applies to new cars that are less than 12 months old.
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Agreed value and stated amount policies are both types of cover where you can have a say in how much your car will be insured for.
A stated amount policy lets you name the value that your car or vehicle will be insured for. It also gives you the option of lowering the value if you want to reduce your premiums.
On the other hand, an agreed value is where you work with the insurer to agree on a value that you’re both happy to accept the car is worth.
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Most insurance policies will provide ‘new for old’ cover as standard for new cars in their first 12 months. But to be eligible, you’ll usually need to be registered as the first owner.
With this protection, if your car is written off or damaged beyond repair in its first year, the insurer will replace it with a new identical model.
So, unless your new car is very unusual, it’s unlikely you’ll need an agreed value policy but it’s best to check with your insurer.
[1]Last checked 3 January 2023