Track Day Insurance – Agreed Limit vs Stated Value vs Agreed Value

Here at Traction we’ve spent a lot of time speaking about how commonly stated value and agreed value are used interchangeably, even though they are actually fundamentally different types of loss settlements. Much of the enthusiast and collector insurance market is focused on one of those two loss types, and how they vary from traditional insurance.

But what about track day insurance? The term “agreed” appears on a number of the most popular track day carrier’s policy documents and websites. Is track day insurance agreed value? What is agreed limit, and is that different than agreed value?

In this blog post we’ll discuss the most common forms of loss settlement types in Track Day and specialty insurance with high level explanations and differences. Of course, what is or is not covered, and how, is exclusively disclosed in your policy. So while this information may be useful as general information, we always recommend you read your policy and seek the advice of a licensed insurance agent.

Do not rely solely on what you read here, or anywhere, to make insurance decisions. The information here is not insurance advice, our goal is to provide information that encourages you to ask questions before you purchase any type of coverage.

Insurance Value Settlement Types – A Primer

Almost any property related insurance policy will describe how repairs are handled, and how and when a “total loss” is declared, which can happen in various forms. Generally one of any number of standard loss settlement types will be used to describe how the value of a total loss is determined. Track day insurance is no different.

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

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

Replacement value rarely shows up in the world of personal car insurance. Actual cash value is the method most traditional car insurance companies determine the value of your car. Stated and Agreed value are generally used by enthusiast and collector policies to provide some additional declaration of the value of the vehicle.

Yet, in the world of track day insurance, its not uncommon to find a loss settlement type called “Agreed Limit”.

Let’s take a look at a few of these loss settlement types you may encounter, or think you may encounter, when shopping for track day insurance.

Stated Value

While many article’s primary focus is on Agreed Limit vs. Agreed Value, some track day insurance companies use a Stated Value. However, unlike what you see in many traditional personal auto insurers stated value policies, there is not a strong reference to paying less.

The most we will pay for a covered Total Loss to a “scheduled auto” is the “limit”; provided that such “scheduled auto” is physically lost or damaged beyond repair.

* Phrasing has been modified lightly to improve readability

Agreed Limit

The language around agreed limit reads very smarmily to the stated value described above, but includes the word “agreed”, but also states “based on”.

In the event of a total “loss” (or constructive total “loss”) of the covered property, the value of your “scheduled automobile” will be based on the Agreed Limit of Insurance shown in the Declarations.

One popular agreed limit track day company even separately notes that modifications must be declared separately in order to be covered.

* Phrasing has been modified lightly to improve readability

Agreed Value

Agreed 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. Just look at this sample from an agreed value policy.

Note: We are not aware of any agreed value track day insurance policies, so this example is from a enthusiast/collector auto policy.

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

What Is The Difference Between Stated Value, Agreed Limit and Agreed Value

Unlike the very clear language differences between stated value and agreed value, with track day insurance the language is a little more nuanced. Why? We believe it’s primarily because the value of the vehicle is not underwritten up front, so they leave themselves an out. Otherwise, what stops you from insuring a $10,000 car for $100,000?

So is agreed limit, or even this more insured friendly stated value language, different from Agreed Value? Yes, primarily because 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. Both agreed limit and Stated value examples we show, “it’s based on” or the “limit of”.

At the end of the day, we describe this difference as the burden. With stated value and agreed limit, if your insurance company feels the value is less than the stated or agreed amount, there becomes a shared burden to prove the value. Most track day insurance policies provide an appraisal process for setting amounts that cannot be resolved.

Declared Value

Occasionally companies, agents or individuals may use the term “declared value”. While declared value meaning can vary, it’s actually more commonly used in reference to shipping. In our experience most track day insurance companies will not officially use the term declared value as a loss settlement type.

If you do come across a situation where declared value is used by an agent or in a conversation, we’d recommend asking some additional questions to determine how the loss settlement is calculated or whether it’s really in reference to agreed value, agreed limit or stated value.

Conclusion

In most cases people may conflate the term agreed limit with agreed value, but they are fundamentally different approaches to loss settlement. Still, most track day insurance policies, whether stated value or agreed limit, often have more insured friendly language than traditional personal auto policies version of stated value.

Our recommendation? If you have questions or concerns talk to the track day providers or seek out advice of a licensed agent. In many cases you can ask for sample policies and review the language for yourself.

We also always suggest you keep good pictures and records of how you determined the value of your vehicle, including any permanently installed modifications, in the event you do need to support the value of your vehicle when you have a claim.

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.