Stated Value vs. Agreed Value

There may be no more common, and yet more impactful, misconception than the one that stated value and agreed value are the same thing. In fact, if you’ve been told they are the same by someone, you may want to avoid their advice about insurance in the future.

Of course, our goal here isn’t to be pedantic. Also, we want to note it’s not that stated value is necessarily bad, which is another common misconception. In fact, there are situations where stated value may be a perfectly viable option. What is important is that they are not the same, and you shouldn’t accept being lead to believe they are.

Insurance Value Settlement Types – A Primer

First, let’s cover what the common insurance settlement types are. There are generally 4 commonly accepted settlement types:

  • Actual Cash Value
  • Stated Value
  • Replacement Value
  • Agreed Value

Replacement value is more commonly found in builds and structure insurance, both personal and commercial. However, when it comes to personal automotive policies you generally will only find three of these types used. Though, that doesn’t mean every insurance company offers all three. In fact, many insurance companies only offer one of the three.

Agreed Value and Guaranteed Value

Most true specialty and enthusiast focused insurance companies offer Agreed Value policies, which is the industry standard term. Some companies, like Hagerty, offer what they call “guaranteed value” policies. Agreed and Guaranteed Value policies are similar, with Guaranteed Value offerings generally bundling additional coverage or offering a more clear value guarantee.

Agreed Value and Guaranteed Value policies generally provide for a specific and agreed upon value up front. The value is the basis for any payments in the event of a total loss.

Additionally, if you’ve restored, made modifications or otherwise have unique situation, many companies that offer agreed value policies will let you factor this into the policy. This is a great option, and not just for high end cars or collectors. These policies are often offered starting as low as $5,000 of coverage. They have applicability is just about any situation where the Actual Cash Value wouldn’t represent the true replacement cost of the vehicle. In many cases unless the value or risk is considered very high, your insurance company may not even require an appraisal. In those situations, pictures and/or documentation is generally requested.

With Agreed Value and Guaranteed Value policies you’ll always want to verify both what the insurance company thinks the value of your specialty car is and where they get the value from, or be prepared to request what you expect the replacement value to be. For example, Hagerty has it’s own value database. While this is great because it does evaluate the enthusiast market, it doesn’t always mean their value will match what you expect, particularly if you have modifications or a unique vehicle.

It should also be noted that with Agreed Value and Guaranteed Value policies that the additional value is factored into the price. So while you may wind up paying a little bit more in some situations, you are also getting more. Though interestingly, these enthusiast and collector policies often actually save you money over traditional insurance because of how they are used.

We will pay the limit shown in the Declarations for each scheduled vehicle, which is agreed to be the value of “your covered auto”*

* Phrasing has been modified lightly to improve readability

Stated Value

Stated Value policies are often offered as a mainstream or cost effective “enthusiast” coverage. However, be careful. The name can be misleading. While it sounds like you are getting the “stated” value as an agreement, MOST traditional stated policies use language that says you will get the the LESSER of the stated value or the actual cash value.

This may leave you getting less for your car than you expected. It may also leave you with less than 100% of the true replacement value of the car and any modifications. Like Actual Cash Value, stated value policies do not often account for collector or enthusiast markets, because the insurance company has the option to use their own valuation service.

Stated Value policies are also very commonly offered in supercar coverage from mainstream carriers. They may leave you thinking you’ll get a specific value for your Porsche, McLaren, Ferrari, Lamborghini or other supercar. However, when they calculate and compare stated value to any available book/actual cash value, so you may wind up with less.

We recommend being careful when brokers or companies try to push stated value as a great option for enthusiasts, or as equal to agreed value. While there are certainly places where stated value makes sense, don’t fall for the potential trap of thinking you are assured of getting the stated value, or that stated value is the same as agreed value.

Stated value will pay out the actual cash value of your vehicle (minus your deductible) or the amount you say it’s worth, whichever is less*

* Phrasing has been modified lightly to improve readability

What Is The Difference Between Stated Value and Agreed Value

As you can see pretty clearly, with stated value insurance while you may be declaring a value up front, the insurance company still will calculate the actual cash value of the vehicle when determining a payout or settlement.

When it comes to the phrasing for agreed value, there are no other conditions. It simply states that the value agreed is the value of your covered auto.

At the end of the day, we describe this difference as the burden. With stated value, if your insurance company decides the value is less than the stated amount, the burden moves to you to prove the value is higher, and that the actual value of the vehicle is more. While this could include cash value for things like modifications, they generally are under no obligation to pay the true replacement cost of the vehicle.

With agreed value the insurance company is obligated to pay the agreed value amount in the event of a total loss. The burden would be on them to show the value is less, and even then, they likely would need to show the value they agreed to was misrepresented in some way originally.

Stated Value Vs. Agreed Value When You Are Not At Fault

Another big difference between agreed value and stated value is how your insurance company will respond if you are not at fault. With agreed value, if you have the appropriate full coverage (including uninsured motorists, depending on the situation), they will generally ensure you get the full value of the vehicle, even if your own insurance company must pay to make up the difference.

With stated value, since their obligation is only the lesser of cash value and the stated amount, you generally wouldn’t expect them to go beyond what cash value is offered by the at fault insurance company.

Of course, how your insurance company responds could vary. But with agreed value coverage you know the value is protected, even when you are not at fault.

When Agreed Value Makes Sense

All things being equal, agreed value is generally always going to be the best option. If nothing else for the simple fact that it requires very little on your part at the time of loss to justify the value of the vehicle. Whether it’s protecting the value of a collectible car, a modified car or a unique vehicle like a JDM or right hand drive import that has no easy way to replace, agreed value makes substantially the most sense.

Still, not every driver, situation or car will qualify for agreed value coverage. With just about all agreed value policies there are also storage requirements, and potentially even usage limitations. And while certain cars and highly qualified drivers may be able to obtain agreed value coverage for their daily drivers, it’s not common.

When Stated Value Makes Sense

While agreed value may be superior, stated value can make sense in a number of situations, particularly when it comes to those cases where you wouldn’t qualify for agreed value insurance. A stated value policy may still have some qualifications and restrictions, it may be more readily available than agreed value insurance.

Also some insurance companies allow you to include the value of modifications in your stated value policy. So unlike traditional actual cash value policies which may outright exclude modifications, many stated value policies allow you to declare the value of additional items.

Conclusion

Bottom line, stated value and agreed value insurance are NOT the same. If you truly want to protect the value of the vehicle you are insuring, there is no question agreed value is the best choice.

But since everyone’s goal is to get the best coverage for your money, if agreed value insurance isn’t an option, stated value may still offer additional protection a standard actual cash value policy would not. So if you can get agreed value, do it. But if you can’t, stated value is still often a better choice than purely actual cash value.

Blog Post Disclaimer

The information in this blog post is intended as general information and not direct insurance advice. The goal is to give you information to think and ask a licensed agent about. This information should not be the sole source of information when making an insurance decision. Every situation is unique, products and coverages may vary by state, company and situation.


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Quotes are estimates and subject to change.  Coverage is not guaranteed and not all drivers, cars or situations will qualify.  Coverage and policies are described in general terms.  Availability and coverage may vary by state and carrier.