Agreed value car insurance

With guaranteed agreed value car insurance you get compensated for the amount your car is worth, if it’s more than the market value of similar cars.

Derri Dunn

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Who are agreed value policies for?

Agreed value car insurance policies pay out a pre-agreed sum in the event of a total loss.

It’s mainly for cars that are worth more than the average for a similar age model. They pay out an amount you’ve both agreed on for your car if it’s written off or stolen, rather than the average market value for it.

They’re useful for classic cars that have held or increased their value with age, or if you’ve made expensive changes to a modified or kit car. The same applies for classic motorbikes.

Owners of valuable new cars and performance cars might consider a guaranteed value policy too. Some insurers offer a new replacement car service if the car is under 12 months old though, so you might not need it - check your policy details.

You could consider Gap insurance as an alternative. It covers the difference between what your car insurance, provider will pay if your car is written off, and the car’s value when you bought it.

Key points

  • At the start of your policy, you’ll agree your car’s value with your insurer. In the event of a total loss, that’s that amount you’ll receive
  • They’re mainly for classic cars, but also some modified vehicles and new cars
  • Expect agreed value policies to cost more, and be harder to find, than market value policies
  • You’ll need to provide evidence of the vehicle’s condition and value

How to get an agreed value policy

Agreed value policies are difficult to find. We checked 345 comprehensive insurance policies on Defaqto, and only 2% offered agreed value cover as standard - a further 9% offered it as an optional extra.[1]

This means that you might need to shop around with individual providers to find the best deal or use a broker – but you can still compare car insurance policies online.

If you’re a member of a classic car owners’ club, or a similar group for enthusiasts, ask about any known agreed value policy insurers you could approach – they might have a club discount or partnership in place.

You know the value of your car better than the insurer, particularly if you’ve done work on it, so if the first quote doesn’t work for you, shop around.

Evidence of car value

When you take out an agreed value policy, you’ll need to prove your car is worth more than the market value. The evidence you need to provide varies between insurers but usually includes:

  • Photos of the vehicle

    Insurers usually specify that you need to take a certain number of pictures of the inside, outside, engine bay and so on

  • A valuation certificate from an independent vehicle valuation expert

    You’ll have to pay for the inspection

  • Bills for recent work done

    As supporting evidence of the vehicle’s value

The cost of agreed value policies

Agreed value policies are more expensive than market value policies.

They’re less common, meaning less competition between insurers, which keeps premium prices high.

As well as generally being more expensive, if the agreed value is added to a basic policy as an optional extra, it’ll also push up the price of the basic policy too.

There are ways you can lower your insurance cost, like building up your no claims discount or lowering your mileage, but these will probably have less of an impact if your premium is already high.

You’ll need to weigh up whether your vehicle is unique and valuable enough to warrant taking out an agreed value policy, or if you’d be better off comparing standard market value policies instead.

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[1]Last checked 20 May 2019

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