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Insurance Terms – ACV, Stated Value, Agreed Value

July 22, 2014

Are you wondering if your auto insurance policy provides the proper coverage to restore your classic or antique auto? Maybe, but maybe not – depending upon if you have a standard auto policy or a specialty policy that specifically covers classic and antique vehicles. The first step is understanding the following terms: Actual Cash Value (ACV), Stated Value and Agreed Value.

Actual Cash Value (ACV)

This coverage is the most common for vehicle policies as well as other types of property policies such as a homeowner policy. It pays out a depreciated value in the event of a claim. The older the property (car, boat, house, etc.), the less value it has.

Stated Value

These policies are better than ACV because they allow you to “state” a value that is greater than its depreciated value. However, these policies still depreciate the property value and usually allows the insurance company to pay “up to’ the stated policy amount without any guarantee of paying that stated amount in full.

Agreed Value

Agreed Value polices guarantees the full amount of the value agreed upon between you and the carrier will be paid in the event of a total loss – without any depreciation. For property outside a certain range of value (which varies by property type and carrier), the carrier will often demand an appraisal.

Different policies offer different coverages. Different valuation methods provide different levels of pay out when a loss occurs. Understanding these insurance terms will help you make an informed decision when shopping for insurance.

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