What Is Stated Value Car Insurance and Who Should Buy It?

Man working on a classic car in his driveway while a small girl watches.

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Stated value insurance is a commonly misunderstood insurance coverage. It has an important purpose but is often misused. The coverage is often used on classic cars insured through many of the major insurance carriers. So if it is the coverage you are thinking of putting on your classic car, you had better know exactly what is being covered.

Stated Value Classic Car Valuation

The valuation of a vehicle is all about a total loss. How much will your insurance carrier pay you for your classic car in case of such a claim? Many people confuse stated value with agreed value.

The stated value determines how the insurance company rates your vehicle, it does not necessarily determine how much the insurance company will pay you in a total loss. Insurance carriers word the coverage so that they are able to pay out the stated value amount or the actual cash value whichever is lower.

When should you purchase stated value insurance?

Stated value is actually an available coverage to help people who own a vehicle which is valued much higher than what they want to insure it for. Insuring a $500,000 appraised vehicle your grandpa passed down to you might be too expensive. You could list its stated value at $60,000 so you still have affordable protection in case of minor damage. It is not as if you paid $500,000 for the vehicle and $60,000 is a reasonable value. Your claims adjuster would still compare the stated value against the actual cost value to determine how much you would be paid out in a total loss.

Pros and Cons of Stated Value Car Insurance

  • Pro: It is a lower-cost car insurance coverage.
  • Con: It does not cover 100% of the vehicle's value.
  • Pro: Stated value car insurance can be added to your regular car insurance policy.
  • Con: It can easily be confused with other types of coverage such as Agreed Value leaving you very upset at the time of a claim.

Stated value insurance is for reducing your cost not increasing your coverage. Keep this in mind when it comes to insuring your classic. Speak with a knowledgeable insurance agent to help you determine what coverage is right for you.

What If You Have a Claim and Thought You Had a Different Coverage

Coverage really needs to be correct at the time the vehicle is added. After an accident occurs is not the time to be figuring out what coverage you have purchased. Thinking you have one coverage when in fact you have purchased a lesser coverage is a tough situation to stomach. The loss can be huge and it is frustrating when you did not understand exactly what you were buying. Speak with your agent and discuss your options. Most likely, you are stuck with the selected coverage unless you can prove the agent made a mistake.