A well-designed auto insurance policy will protect a car for its full value. With standard car insurance policies, determining a typical car’s value is straightforward. There are price guides and many comparable sales that insurers use to determine how much a relatively new car is worth. Determining how much a classic car should be insured for is a more involved matter. Here are some different methods Massachusetts insurance providers might use to determine a classic car’s value when underwriting a classic car insurance policy for the automobile.
How Will My Automobile Be Valued by a Massachusetts Classic Car Insurance Provider?
Classic Car Insurance Policies May Be State Value or Agreed Value Policies
How an insurance company in Massachusetts values a classic car depends first on the type of insurance policy being purchased. There are two kinds of classic car insurance policies:
Stated Value Policies, which typically insure an automobile for its fair-market value
Agreed Value Policies, which typically insure an automobile for a pre-agreed upon amount
Stated Value Classic Auto Insurance Policies Cover an Automobile’s Fair-Market Value
When valuing classic automobiles for stated value classic auto insurance policies, insurers might look at a variety of sources:
Recent sale prices of comparable classic vehicles
A third-party appraisal that was completed by a qualified appraiser
Winning bids for similar classic vehicles that were sold at auction
These data points aren’t all that different from the information sources that insurers use when evaluating newer vehicles. When figuring out a newer vehicle’s value, insurers will often look at the sale prices for identical vehicles, what price guides value the vehicle at and how much the vehicle sells for at auction.
With classic cars, however, the number of sales, appraisals and auctions that insurers have available are usually much fewer. In most cases, there aren’t a lot of similar classic automobiles -- which can lead to ambiguities and disagreements over how much a classic automobile is worth.
Agreed Value Classic Auto Insurance Policies Provide a Selected Amount of Coverage
Agreed value auto insurance policies are primarily used in two scenarios. First, auto owners may opt for an agreed value policy if they disagree with how an insurance company values their classic automobile. Second, auto owners may also select an agreed value policy if they agree with the evaluation of their automobile -- but the money and work they’ve put into their automobile exceed its fair-market value.
In contrast to stated value policies, how much agreed value policies insure an automobile for usually isn’t related to its fair-market value. Instead, these policies normally offer an amount of coverage that’s agreed upon by the policyholder and issuing insurance provider. This amount is typically agreed upon either before or when a policy is purchased.
As is true with stated value policies, agreed value policies that offer more protection tend to cost a little more than those that have lower limits. Classic auto owners can see the correlation between premiums and limits as they compare policies, and they can pick a balance between the two that provides the coverage they need while remaining affordable.
Let a Massachusetts Insurance Agent Help You Find Classic Auto Insurance
For help deciding between stated value and agreed value classic car insurance, contact an independent insurance agent who’s in Massachusetts and specializes in this type of insurnace. An independent agent will be able to help you find quotes for both types of policies and select the one that’ll provide the best coverage for your classic automobile.