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What's the difference between "stated value" and "agreed value" insurance?
Thx, Mike
Thx, Mike
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Re: Insurance definitions
Don't really know as specifics of terminology varies with fine print in individual contracts. But, here's the general drift....
Standard insurance pays you ACV (actual cash value) in the event of a total loss. Here, the adjustor goes to a blue book (in the event of a classic old car it reads $25/junker) for his supporting basis to pay off the claim. Owner, typically rants/raves his 'gem' was worth much more. Now the trick, PROVE IT!
A variation on the standard policy is a 'declared value' policy where you take photos of the car and get some kind of appraisal to support it's 'declared value'. When insurance underwritter is happy, the 'declared value' amount is written into the policy as a rider, some kind of surcharge is made for the excess, and you're sitting pretty, right?
WRONG, in the event of a total loss, the fine print in most of these policies reads that they will pay EITHER the declared value or the ACV whichever is LESS at the time of loss. So, you'll see none of these type policies constantly asking you to update your appraisal because it's in their interest -- they collect the rider premium and it's your responsibility to maintain current value justification support....
On the insurer's side, how is he to know that 'x' days/months/years down the road from original policy issue, you didn't strip the valuable items off the car, let it's condition deteriorate, Etc? The insurer is in the business of putting you back to where you were financially at the time of your casualty. Knowing how much $$$ this entails is often a fine art.
I take a standard policy on my driver (why pay for extra rider that's good for nothing except argument shortly after the policy's issued?) and have it judged frequently. No, NCRS judging does NOT establish a value for the vehicle, but back to back judgings show a consistent history that the vehicle was in 'XYZ' concours condition and that CAN be worked backwards via auction/appraiser data and a jury would be hard pressed to take the insurer's position I was driving a 'junker'.... ------------------------------------------------------------------------
The alternative policy is based on inland marine concepts. We call it 'collector's insurance' a classic car policy, Etc. This goes back to the day ship's sailed and when they went down, who was to prove the contents (hence value of loss). Groups like Lloyds of London arose to insure these 'special cases'. The ship's manifest from the last port of call was used to set value and 'gentlemen' paid 'gentlemen' in the event of a casualty.
The same concept exists today for collector's cars. Here, you go to a table, pick the value of your car and the policy premium flows from that value. Minor documentation to support the value of the asset is given up front, and these policies are typically filled with 'out clauses' -- can't put more than X miles/year on the car, can't park it on the street, must have suitable and permanent secure garage for it to 'live' in, only used for 'club' or 'parade' driving purposes....
The out clauses, assure the insurer he's got a special case and his underwritting won't be exposed to 'normal' casualty risks associated with a typical driver car. Now, if you've got one of these policies )I do on my trailer queen) and you go merrily driving about, you just might find you're in a 'sticky wicket' affair if you try to collect on a loss in situations that 'red flag' the out clauses (it was stolen while you were at work, away from home, overnight in motel lot, Etc.). -
Re: Insurance definitions
Don't really know as specifics of terminology varies with fine print in individual contracts. But, here's the general drift....
Standard insurance pays you ACV (actual cash value) in the event of a total loss. Here, the adjustor goes to a blue book (in the event of a classic old car it reads $25/junker) for his supporting basis to pay off the claim. Owner, typically rants/raves his 'gem' was worth much more. Now the trick, PROVE IT!
A variation on the standard policy is a 'declared value' policy where you take photos of the car and get some kind of appraisal to support it's 'declared value'. When insurance underwritter is happy, the 'declared value' amount is written into the policy as a rider, some kind of surcharge is made for the excess, and you're sitting pretty, right?
WRONG, in the event of a total loss, the fine print in most of these policies reads that they will pay EITHER the declared value or the ACV whichever is LESS at the time of loss. So, you'll see none of these type policies constantly asking you to update your appraisal because it's in their interest -- they collect the rider premium and it's your responsibility to maintain current value justification support....
On the insurer's side, how is he to know that 'x' days/months/years down the road from original policy issue, you didn't strip the valuable items off the car, let it's condition deteriorate, Etc? The insurer is in the business of putting you back to where you were financially at the time of your casualty. Knowing how much $$$ this entails is often a fine art.
I take a standard policy on my driver (why pay for extra rider that's good for nothing except argument shortly after the policy's issued?) and have it judged frequently. No, NCRS judging does NOT establish a value for the vehicle, but back to back judgings show a consistent history that the vehicle was in 'XYZ' concours condition and that CAN be worked backwards via auction/appraiser data and a jury would be hard pressed to take the insurer's position I was driving a 'junker'.... ------------------------------------------------------------------------
The alternative policy is based on inland marine concepts. We call it 'collector's insurance' a classic car policy, Etc. This goes back to the day ship's sailed and when they went down, who was to prove the contents (hence value of loss). Groups like Lloyds of London arose to insure these 'special cases'. The ship's manifest from the last port of call was used to set value and 'gentlemen' paid 'gentlemen' in the event of a casualty.
The same concept exists today for collector's cars. Here, you go to a table, pick the value of your car and the policy premium flows from that value. Minor documentation to support the value of the asset is given up front, and these policies are typically filled with 'out clauses' -- can't put more than X miles/year on the car, can't park it on the street, must have suitable and permanent secure garage for it to 'live' in, only used for 'club' or 'parade' driving purposes....
The out clauses, assure the insurer he's got a special case and his underwritting won't be exposed to 'normal' casualty risks associated with a typical driver car. Now, if you've got one of these policies )I do on my trailer queen) and you go merrily driving about, you just might find you're in a 'sticky wicket' affair if you try to collect on a loss in situations that 'red flag' the out clauses (it was stolen while you were at work, away from home, overnight in motel lot, Etc.).Comment
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