Car insurance coverage

In speaking with my agent an hour or so ago, she demonstrated a 20,000 dollar difference in a stated value policy was 18$
I can’t see how understating a stated value policy could be worth it.
On the other hand, you can’t expect to insure a 10,000 dollar car for 100,000, and collect.

Hagarty has guidelines to minimize that. When I insured the FHC with them they asked what I wanted for the agreed upon value. I said $XX,XXX and the lady said, "OK, send us a couple of pictures. I e-mailed a shot of the exterior interior and engine and she said no problem. She then told me for my car’s year, make and model they could insure it for up to $YY,YYY without the need for an appraisal but above that amount an appraisal would be needed. At least that’s how I recall it works. That threshhold was slightly above what I felt my car was worth. At renewal I adjust the agreed upon value based on that threshold which changes as the market changes I guess.

While on the subject, when the car was in pieces in the garage I lowered the liability to the state minimums figuring it wasn’t going to be in any accidents I caused while it was in pieces. That lowered the cost. Once it was back on the road I jacked up the liability coverages. Hagarty also will insure the parts you have laying around during your restoration. That’s a nice perk worth discussing with them.

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Thanks Geo,
To me that still is about as clear as mud!
Cheers,
LLynn

It’s hard for me to comment without a clearer understanding of exactly what was quoted here. As I understand it, the folks who opt for stated value fall into two categories:

  1. Those who don’t really understand the difference, and see that the Stated Value policy has the lower premiums, and therefore opt for that. They will probably be surprised when they make a claim on a write-off and find that they only receive the “Actual Cash Value” instead of the Stated Value.

  2. Those who can’t afford to insure the Bugatti (substitute your favorite high value classic car) they inherited from their Dad for it’s true value, but don’t want to sell it. They put a Stated Value on it well below the real value (maybe 100s of thousands of $ below), and pay the lower premiums. They knowingly accept the risk that if the car is totalled, they won’t get it’s true value, but they got to enjoy it.

The biggest downside of “Stated Value” to me is that the Actual cash Valuation is unknown until you have an accident, and is set by the Insurance Company. It may turn out to be a lot less than you expect…

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I’m using stated on a Shelby Cobra build. The values are well established. On my 36 agreed. I don’t like the stated either. The agreed does require more red tape.

So what does Hagerty generally have? Stated value or agreed value? Or one or the other depending on the policy?

Hi Drew,
Pretty sure that we have ‘agreed value’ through Hagerty. Still don’t understand the difference, so if my car suffers damage that is considered 70% value can they still total it?
Just a very confusing topic to me and I just hope we have adequate coverage…
Cheers,
LLynn

I know I do…

The difference as I understand it:

If you have stated value think of it as a cap. If the stated value is $50,000 that’s the max they willo pay, but if at the time of your loss the value of the car is only $40,000 that’s what they will pay. How they arrive at the $40,000 value is another discussion.

Agreed value is just that. You and the insurer agree that if your car is totaled or disappears never to be found you will be paid an agreed upon value, that value being what both parties agreed to at the initiation of the policy term. If you both agreed on $50,000 that’s what you will get, even if the market has gone south and your car is only worth $30,000.

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That sounds right to me.

My biggest concern with ‘stated’ is that you can easily end up in a pissing contest with the carrier over what the ACV should be. The term itself can be defined several ways and may be especially tricky on property that appreciates (or at least does not depreciate):

Bottom line: ACV will be subjective and you may not agree or like the answer.

This is really a separate issue and can affect both types of policies. Sometimes people use an agreed value that is much lower than the true value (David’s Bugatti example above) thinking their only exposure is if there is a total loss they will not collect the full value. But they also run the risk of a partial loss being declared ‘total’ at a much lower dollar amount than would have been the case had they been insured for the full value.

Sometimes people come up with schemes to try and get the best of an insurance company. You’ll do as well to try and beat the house at a casino.

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Ha!!, no sh*t!! Those boys can do the math, and they have the hammer!!

What I don’t understand too well is, if I’m paying a premium based on a maximum of a 50,000 loss, why does it matter what the car is. I’m paying their premium based on a set value. Are they going to refund 1/2 my premium with interest, if they only pay half the stated value?

Some speculation here (but I think it is correct)…

Your $50,000 stated value means they will pay no more than that. What they would actually pay in the event of a total loss would be the lesser of $50,000 and what they think the car is worth (the ACV).

The premium is most likely based on (their) assumption that the ACV will be less than the stated value. That is why ‘stated value’ coverage will cost less than ‘agreed value’ coverage where the insurer knows they are on the hook for the full amount.

Stated value isn’t a bad thing - just so you know what protection you’re getting and have decided that is enough to let you sleep at night.

That actually not a bad explanation. It perfectly describes the answer my agent gave me when I asked about increasing the stated value 20,000$ . She said 18$… maybe covers the paperwork.

I pretty much agree with Geo’s interpretation, with the proviso that I am cynical about the practices of insurance companies in general. I will try to illustrate with an example. Let’s say you have a classic car which is not that rare, so that valuations are pretty well known and documented. It is “worth” $50,000. You insure it with a stated value policy of $50,000. Then, as a result of a covered incident, the car sustains damage . The insurance company will assess the value of the car prior to the accident. I think we all know that their assessment will be less than $50,000 - the cynical me says a lot less. So, you’ll get into negotiation with the assessor about what the ACV should be. This will take a long time, with the insurance company knowing that the longer it goes unresolved, the more likely you will be to accept the low offer, because you need the money. The insurance company has most, if not all, of the cards. This is exactly the same scenario you go through with regular (ACV) insurance on your non-classic daily driver. Basically, the “stated value” never comes into play at all if it is set close to the real value of the car at the time it is insured. The insurance company will always assess the value lower. The only time a “stated value” will come into play is if you deliberately set it well below the real value of the car, as per my Bugatti example. In that case, the ACV will be higher than the stated value, so the insurance company will only pay out the stated value (the lower of the two). As far as I can see, taking out a “stated value” policy with an accurate fair market “stated value” buys you nothing - you may as well go with a regular ACV policy, all other things being equal. All IMHO of course…

I think so too, Lynn. After my respray I bumped up the coverage my car with Hagerty to the highest value indicated by the Hagerty valuation tool. And the reason I moved to Hagerty in the first place was after my bad experience with Nationwide and Jerry’s positive response from Hagerty after his bonnet crunch.

–Drew

It seems like it’s a ‘crap shoot’ at best judging by what the knowledgable folks here have to say, at least we know that Hagerty has treated our friends well in the past and can only hope they continue to do so. It comes down to ‘risk management’ and we can only do so much if we want to enjoy driving our cars.
Cheers,
LLynn

Exactly. Insurance companies build their rates on historical statistical averages and modify them as events dictate, taking location into account. That last, for example, is why homeowners insurance in Rio Rancho New Mexico is about 60% of what it is here for a dwelling of equal value. At the same time auto insurance is about 50% higher in Rio Rancho than it is here.

I am probably stating the obvious here, but it is extremely important to document the condition of your car before any damage claim is made. This should include lots of good quality photographs showing the details of your car and receipts for all work done and parts purchased. Insurance companies always want to work with average pricing and costs of repair based on local shops to whom they refer fender benders all the time. If you are going to convince them that their normal approach is not adequate, you will need documentation to back up your assertions. Insurers like Hagerty that specialize in collector cars are much easier to work with, but if your car is hit by another driver who is at fault, you will be dealing with his or her insurer, not yours.

Bob,

I agree with your advice about the importance of documenting the condition of your car for the reasons you describe. However, I would add that in my claims experience (fortunately only once) with Hagerty, when my XK140 was rear ended by another driver who was at fault, my only dealings with the other driver’s insurance was to confirm my insurance details when they contacted me. Hagerty handled everything else on my behalf, including the need to significantly increase the estimate for repair expenses above the initial value. This, to me, was a large part of why I was so happy with Hagerty’s service. I didn’t have to deal with an insurance company who, for example, questioned why I needed triple chrome plating etc. Hagerty just dealt with it.

When my wife’s Toyota got hit by a runaway Triumph (at a club event) I was delighted to hear that the TR6 was insured with Hagerty. As expected, they took good care of her.

BTW - The exciting video is narrated by a J-L Forum member (William Shatner was not available).