Insurance and car value

[Murphy]

I used Midwest Insurance (Robbin- He is listed on CC.)for my Kirkham. Their underwriter accepted receipts rather than an appraisal. They wrote it through Infinity Insurance which is a major insurer. My regular car is through State Farm. I got a quote from my agent and it was clear they did not want the business based on their quote.

[shelby racer]

I finally found the terms and definitions I was looking for and took the liberty of copying them.


Types of Coverage

There are three basic types of coverage. Understanding the differences and selecting the best for your needs will play a very important role should there be the unfortunate need to file a claim. They are:

* Actual Cash Value (ACV)
* Stated Value (SV)
* Agreed Value (AV)

Insurance companies will use one of these three different policy forms. These methods of determining the value of a loss for each is different, misunderstood, and frequently misrepresented by insurance agents.

Actual Cash Value: This is the typical type of coverage in a standard insurance policy and pays a “depreciated” value in the event of a claim. As the vehicle gets older, its value decreases. The insurance claims adjuster decides what the car was worth at the time of the loss. Disagreements can sometimes only be solved with litigation.

Stated Amount: This is the type of policy is often used for collector car policies and is frequently misunderstood. Many "Stated Amount" forms state the insurance company will pay the lesser of:

The Stated Amount
or
The cost to repair the covered auto not to exceed the “Stated Amount”
or
The “Actual Cash Value”

The “Stated Amount” only serves to set the maximum amount that will be paid. It does not guarantee you a settlement amount that reflects the value of the car when a loss occurs. The “Actual Cash Value” language allows the claims adjuster to settle your loss for an amount less than the “Stated Amount.” Sadly, most insurance agents are unaware of this detail. Most agents, unaware of the actual policy language, will insist if your collector car is stolen or totaled, you will receive the stated value. Wrong!

Agreed Value: This the type of coverage you should purchase. With this policy you are guaranteed in writing the amount you would acctually receive if you car is stolen or totaled. There should be no “Actual Cash Value” clause in the policy. The “Agreed Amount” policy should state that the insurance company will pay you the lesser of: The “Agreed Amount” or the cost to repair the car, not to exceed the “Agreed Amount”.

The “Agreed Amount” should be reviewed carefully with your agent before the policy is issued. Your agent and you must agree together upon the “Agreed Amount” before the policy is issued. The “Agreed Amount” should represent the true market value of the car at the time the policy is written. If the market value changes during the policy period, the “Agreed Amount” can be changed by endorsement. Before policy renewal each year the “Agreed Amount” should be changed, if necessary, to reflect current market value.

Most standard insurance companies do not offer an “Agreed Value” policy.


We had a talk by a Ferrari restorer / specialty body shop at a Nor Cal SAAC meeting a while ago and since the owner of the shop has had to deal with many insurance companies over the years, he gave us an education. He (and the members) had a number of horror stories regarding cars not being insured for what the owner thought they were because they were insured for ACV (Agreed Cash Value) which is what the insurance company determines. Moral of the story, ALWAYS make sure that your contract reads "AGREED" Value and NO Where does it say ACV or Agreed Cash Value. YMMV.

John(;-)