What is Agreed Value in Insurance?

Agreed value is a critical term in an insurance policy that refers to a pre-determined value for an insured item. It is the amount mutually agreed upon by both the insurer and the policyholder at the inception of the policy.

In case of a total loss, such as if the insured item is destroyed or stolen, the insurance company would be liable to pay out the previously agreed value. Notably, this agreed value does not factor in depreciation, which means the payout is not affected by any potential decrease in the item’s value over time.

It provides policyholders with certainty and peace of mind, knowing exactly how much compensation to expect should a total loss occur.

Which Insurance Policies Have Agreed Value?

In the realm of car insurance, agreed value is particularly applicable to classic or show cars that have undergone extensive restoration. Essentially, the value of these vehicles doesn’t conform to typical depreciation models, making traditional insurance inadequate. Therefore, insurers and car owners come to a consensus, or an “agreed value”, regarding the car’s worth.

In addition to classic cars, agreed value policies find their use in newer motorhomes and travel trailers. Similarly, boat policies also incorporate agreed value, reflecting unique characteristics of marine vessels.

Furthermore, new motorcycles, with their high susceptibility to damage, often employ this coverage. These diverse applications underscore the adaptability and importance of agreed value in various insurance offerings.

Is it Possible to Insure My Car With Agreed Value Coverage?

Ordinarily, a standard auto insurance policy provides coverage based on the ‘actual cash value’ of the vehicle. This term refers to the car’s original cost, deducted for wear and tear or depreciation. Consequently, in case of a total loss, the payout may not necessarily cover the full cost of a new, similar vehicle.

This is due to the fact that cars generally depreciate over time, and the actual cash value mirrors this decrease in value. Essentially, you receive the market value of the car at the time of the accident, not the price you paid initially.

Agreed Value in Homeowners Insurance Policies

Homeowners policies often enable you to insure select items for their agreed value, thereby providing more comprehensive coverage.

• Jewelry: Expensive pieces like engagement rings can be insured at their purchase price.
• Artworks: Unique paintings and sculptures can be assessed and insured at their appraised value.
• Antiques: Heirlooms and vintage furniture often carry high agreed values due to their rarity and condition.
• Musical Instruments: High-end instruments like a grand piano or a vintage guitar can be insured at their replacement cost.
• High-tech Equipment: Specialty technology, such as professional-grade cameras or home theater systems, can also be covered at an agreed value.

This approach ensures that these high-value items are fully protected against potential loss or damage.

Have More Questions About Insurance?

We’re here to assist with your insurance needs. We’re just one call away if you’re interested in agreed value coverage for your motorhome, boat, motorcycle, or homeowners policy.. Don’t hesitate to contact us for more comprehensive information on all types of insurance. For a tailored quote, please click on the link below. Remember, securing your assets is always a wise decision, so let us help you navigate your options.