Let me tell you about agreed value in car insurance because many car owners feel confused by it. The difference between market value and agreed value matters a lot when buying insurance. Market value means your policy shows one price - the most money you can receive if your car becomes a total loss. Agreed value works differently because you tell the insurer what your car is worth, they agree, and that amount stays fixed during your policy year. If your car gets destroyed or stolen, you receive that exact agreed amount.
Your insurance company promises to pay the figure you both decided on if something bad happens. They also let you change this value during the year if your car becomes worth more money. For brand new cars, agreeing on value happens easily - the insurer uses the price you paid, including all extras. Older cars need more work to be valued correctly. Insurance companies check auction results and talk with car clubs, dealers, and experts to find the right number. Cars with special modifications benefit greatly from agreed value policies.
Cars under two years old worth less than £750,000 have special rules. The insurance company replaces these with identical new vehicles or pays the agreed value - whichever gives you more money. Different rules apply to other cars. Vehicles between two and fifteen years old worth under £750,000 receive up to 150% of the agreed value for replacement. More expensive cars in this age range get up to 125% of the agreed value instead. Very old cars - those over fifteen years - receive up to 125% of the agreed value or £250,000 (whichever costs less) for repairs.
When cars suffer partial damage, insurance pays up to the agreed value to fix everything back to how it looked before the accident. You should always keep an eye on car prices across the market, anyway. This helps make sure your insurance reflects big changes in what your car might sell for. Many people wonder about extra costs for agreed value coverage compared to market value options. Different companies handle this differently. Some places charge nothing extra for agreed value policies, giving you better protection at no added cost.
The agreed value approach makes perfect sense for special or classic cars. It removes arguments about worth after accidents happen. You already settled that question when you bought the policy. This creates peace of mind for owners of unique or rare vehicles. The insurance company cannot reduce the payout later by claiming market values dropped. Everything stays clear from the beginning, making the claims process much simpler if something unfortunate happens to your beloved car.
Your insurance company promises to pay the figure you both decided on if something bad happens. They also let you change this value during the year if your car becomes worth more money. For brand new cars, agreeing on value happens easily - the insurer uses the price you paid, including all extras. Older cars need more work to be valued correctly. Insurance companies check auction results and talk with car clubs, dealers, and experts to find the right number. Cars with special modifications benefit greatly from agreed value policies.
Cars under two years old worth less than £750,000 have special rules. The insurance company replaces these with identical new vehicles or pays the agreed value - whichever gives you more money. Different rules apply to other cars. Vehicles between two and fifteen years old worth under £750,000 receive up to 150% of the agreed value for replacement. More expensive cars in this age range get up to 125% of the agreed value instead. Very old cars - those over fifteen years - receive up to 125% of the agreed value or £250,000 (whichever costs less) for repairs.
When cars suffer partial damage, insurance pays up to the agreed value to fix everything back to how it looked before the accident. You should always keep an eye on car prices across the market, anyway. This helps make sure your insurance reflects big changes in what your car might sell for. Many people wonder about extra costs for agreed value coverage compared to market value options. Different companies handle this differently. Some places charge nothing extra for agreed value policies, giving you better protection at no added cost.
The agreed value approach makes perfect sense for special or classic cars. It removes arguments about worth after accidents happen. You already settled that question when you bought the policy. This creates peace of mind for owners of unique or rare vehicles. The insurance company cannot reduce the payout later by claiming market values dropped. Everything stays clear from the beginning, making the claims process much simpler if something unfortunate happens to your beloved car.
