This article provides general information about the insurance industry and does not describe Hagerty’s specific products or policy terms unless clearly noted.
The value of your classic car can be hard to gauge. Not only does the market for collectable cars rise and fall, but the passion you put into your pride and joy will also have an impact on what you think it may be worth. To protect your investment, both financial and sentimental, you can take out a classic car insurance policy with agreed value.
Should misfortune strike in the form of a total loss, then your insurer will agree to pay out exactly what you agreed it was worth when you took the policy out, less any excess and/or salvage value, if retained by you. This offers a degree of certainty and reassurance you may not get with a more conventional classic car insurance policy.
To help you understand agreed value, its benefits, and if it’s right for you, we’ve put together this handy guide. Here’s what we will cover:
- What agreed value is
- How is it different from standard insurance policies
- When you should add agreed value to your insurance policy
- How to value your classic car
What does agreed value mean?
Put simply, agreed value is a type of ‘add on’ offered by some insurance providers where the insurer and the policyholder agree on an exact amount that a car is worth before the policy begins. It’s designed to give you peace of mind that in the event of a total loss, you will receive the amount you and your insurer agreed at the beginning – regardless of whether your vehicle has depreciated in value.
When setting this price, specialist classic car insurers like us will consider the price for comparable vehicles, based on extensive ongoing research into the classic car market, but also take into account how much you have spent on the car and its overall condition to more accurately assess the value. It’s very much a two-way discussion to reach a realistic figure that you and the insurer are happy with.
At Hagerty UK, we have extensive knowledge of the values of classic and collectable cars. The UK Hagerty Price Guide tracks over 3000 models of cars, including auction results, insured values, and both current and historic values.
How agreed value differs from market value
Traditionally, standard insurance is based on the market value of the car when a claim is made. With new cars, depreciation is a massive factor, and in almost every case, as soon as you leave the showroom, your car’s value will have dropped. In the event of a claim, insurance companies will consult a depreciation database and take in information such as your car’s mileage and service history before coming up with a settlement value.
Classic cars don’t tend to follow that same course, with prices varying based on factors such as rarity, age, mileage, condition and originality, for example, which is why including agreed value on your classic car insurance policy could well be a better fit.
With agreed value, you and the insurer will look at your specific car and settle on a price when you take out the policy, based on an agreement between the two of you. In the event of a total loss, you are guaranteed to receive the agreed amount, less any excess and/or salvage value, if retained by you.
When should you choose agreed value?
Determining a vehicle’s market value relies in part on what similar vehicles are worth. If your car is rarer, unusual, or older, there are fewer comparison points, and it could end up undervalued. If you can, it’s best to work with a specialist classic car insurer who understands the ever-changing value and collectability of classic cars.
With an agreed value, you will discuss the value of your vehicle with the insurer, and, as the name suggests, agree on the value.
By including agreed value in your classic car insurance policy, you will be paid the precise amount that you defined with your insurer in the event of a total loss claim – protecting you from any potential decreases in its market value. You get peace of mind by knowing the value of your cherished car should you find yourself in the unfortunate position of having to make a claim.
Although there are many benefits to agreed value, it’s not for everyone. If your vehicle has been rising in value significantly over recent years, you could end up with a settlement figure that’s way below what your car is actually worth in the event of a total loss.
How to value your classic car
To get an idea of what your car could be worth, your first point of call should be our online Valuation Tool, which uses data from Hagerty’s Price Guide gathered from auction prices, and both private and dealer sales. We use the grading system below, which considers the car’s condition to help identify its value:
- #4 Fair: Daily drivers, with flaws visible to the naked eye.
- #3 Good: May have some flaws, but will be balanced by other factors such as fresh paintwork.
- #2 Excellent: Minimal flaws, if any.
- #1: Concours: Exceptional vehicles that are considered the best in the world.
It only takes a few clicks to get an idea of your car’s value, and then the next step would be to contact your chosen insurer to discuss your car in detail. If you wish to proceed with an agreed value insurance policy, you may be asked to submit documentation and photographs and sometimes even an independent valuation report to confirm your car’s history and condition.
As the classic car market can go up or down, you have the option to review the valuation when you renew to reflect any changes in value – hopefully upwards, of course!
Not sure if your vehicle is considered a classic? Read our article on what counts as a classic for classic car insurance to learn more.
Classic Car Insurance from Hagerty UK
At Hagerty UK, all our classic car insurance policies are fully comprehensive as standard, which includes agreed value at no extra cost. We are rated ‘Excellent’ on TrustPilot and are trusted by many classic car owners UK-wide to protect their classic cars. Get a quote today.
