What Is the Difference Between Agreed Value and Stated Value Car Insurance?

An agreed value car insurance policy covers a vehicle in the event of total loss at an amount that is agreed upon by the car owner and his insurance broker prior to signing the policy, explains Leland-West Insurance Brokers. Stated value car insurance covers the lesser of the actual cash value and the stated value the insurance company places on a vehicle, states About.com.

Typical auto insurance policies pay plan holders the actual cash value of a vehicle in the case of a total loss, notes Leland-West Insurance Brokers. Classic car owners and owners of vehicles with very high value benefit from a plan that pays an agreed-upon value. Consumers should ensure that their agreed value insurance policy states clearly that the value is paid in the case of total loss with no exceptions.

Stated value car insurance is based on the rating an insurance company places on a vehicle; although, in the event of a total loss, the company can instead choose to pay the actual cash value, notes About.com. People who do not want to make the high premium payments associated with agreed value insurance plans can undervalue their vehicles and choose to insure them at their stated values in exchange for lower monthly insurance costs.