A client with a restored classic insured under a standard auto policy may be significantly underinsured. Standard auto pays actual cash value — depreciated market value. For a vehicle that's appreciated, that number may bear no relationship to what the car is actually worth.
A client with a restored 1969 Mustang insured under a standard auto policy is not necessarily covered for what the car is actually worth. Standard auto policies pay actual cash value — depreciated market value at the time of the loss. For a collector vehicle that has appreciated or been restored, that number may have no relationship to what the owner has invested.
How Standard Auto Policies Value a Total Loss
At a total loss, a standard auto policy pays what the vehicle would have sold for on the open market the day before it was destroyed. For a daily driver, that formula generally works. For a classic that took years of work and significant money to bring to show condition, the ACV calculation is a different story.
The car may be worth far more than any standard valuation guide suggests — and the insurer's formula will not capture that.
Stated Value vs. Agreed Value
Collector car policies typically offer two approaches, and the difference matters. Under a stated value policy, the insurer pays the lesser of the stated amount or actual cash value at the time of loss. A client can list the car at $50,000 and still receive far less if the ACV calculation comes in lower.
Under an agreed value policy, both parties establish the car's value upfront. At a total loss, that's exactly what pays — no depreciation, no ACV formula applied after the fact.
Agreed value is what most collector car owners actually need. Stated value looks like agreed value at purchase. It often isn't.
The Question Worth Asking
For any client with a collector, classic, or antique vehicle — particularly one that's been restored or significantly modified — the question at renewal is simple: does their current policy pay what the car is worth, or what depreciation says it's worth?
Agreed value policies typically require the vehicle to be used as a collector rather than a daily driver, but for clients who fit that profile, they're the right product. If a client's $60,000 restored pickup is sitting on a standard auto policy, a total loss is going to be a very difficult conversation.