Agreed value auto insurance is a type of coverage that requires you and the insurance company to settle on the value of your vehicle before the policy goes into effect. This is a great option if you’ve put a lot of work into the vehicle and would like to recoup more of the loss if the car or truck was involved in an accident. To help you get a better idea of what to expect, here are four questions about agreed value car insurance New Orleans LA along with the answers. 

How Does It Work?

Setting an agreed value helps to protect you in the event that the vehicle sustains significant damage during a covered event. With most policies of this type, the provider will cover the cost of the repairs or provide the agreed value, whichever is less. In the event that the car is totaled, you’re more likely to receive the agreed value instead of the current market value or what the insurance company considers the cost of replacing the wrecked vehicle with one of similar value. 

Is Agreed Value Better Than Market Value?

Agreed value is something that many car collectors choose. That’s because they spend time and money making sure the vehicles remain in mint condition and use only original parts if possible. That can make them worth considerably more than the market value. For this reason, agreed value insurance provides better protection in the event of an accident. 

Consider what would happen if you did not go with this option. While you may have a lot invested in the vehicle, receiving the market value for a totaled vehicle will only cover a portion of that investment. In effect, you stand to lose quite a bit financially. While having agreed value insurance won’t bring the car back after it’s totaled, you will have more money to use for a replacement. 

Will Agreed Value Depreciate Over Time?

With most insurers, the agreed value remains constant. There is the option of revisiting that value when it’s time to renew for another term. That’s actually to your advantage if there’s been some additional work done on the vehicle in the interim. You might be able to convince the insurance provider that the car is now worth more than it was at the beginning of the previous term. 

This is one of the reasons why agreed value car insurance New Orleans LA is a smart move if you own a vintage or classic vehicle. While you hope to keep the car for the rest of your life (or at least until you decide to sell it), knowing the value will remain constant is one way to protect the investment. 

What About the Cost?

Generally, expect to pay more for agreed value coverage than you would for coverage based on current market value. It’s possible to manage the cost to some degree by setting an agreed value that’s actually a little lower but still above the market value. If the car should be totaled in an accident, you’ll receive more of a return with this type of policy. 

Would you like to know more about agreed value auto coverage? Talk with an agent today. Compare it with what you can get with standard auto insurance. Depending on the type of vehicle you want to insure, agreed value may be the only practical solution. 

Joyce Laroche