Let’s look at the two different types of auto insurance: Stated Value and Agreed Value.
“Stated Value” is the insurance most of us have on our daily drivers which are depreciating. As an aside on depreciation, most new cars depreciate by approximately 10% per year over the first five years, with diminishing depreciation thereafter. This obviously varies by make, model, condition and miles driven. “Stated Value” basically means that in the event of a loss, your insurance company will “state” or determine what your car is worth. If you disagree with this value, be aware of the “Appraisal Clause” in the "Damage to A Vehicle" section of your policy.
“Agreed Value” is the preferred insurance for classic, collector or specialty cars that are appreciating in value, or at least no longer depreciating. Requirements are that they are not daily drivers, garaged and with low annual miles.
You and the insurance company ‘agree’ on the value, and in the event of a loss, you are paid the agreed value. Because of the requirements, Agreed Value insurance is usually considerably less expensive than Stated Value.
Often we hear owners of collector cars say “Oh, I just added it to the same policy (stated value) as the family’s daily drivers. We STRONGLY advise against this! We have clients who were unable to claim full compensation for their collector cars simply because they had the wrong type of insurance coverage – “stated” instead of “agreed” value.
More on the Appraisal Clause and Diminished Value in upcoming blogs from SouthFloridaAutoAppraisers .
We’re all familiar with Depreciation, right? It’s the gradual loss of value over a given time.
So what’s Diminished Value? Let’s look at this scenario.
Imagine that you are stationary at a stop light or sign and suddenly a negligent driver rear-ends your vehicle. Your vehicle has just suffered Diminished Value (also known as inherent diminished value or diminution of value).