Nearly 80% of our customers call us for an appraisal to get their custom or collector car insured through a specialty insurance company that sells Collector Car Insurance also know as Agreed Value Insurance.
Agreed value insurance is often confused with “Stated Value” which sounds a lot like “Agreed Value”, but they are completely different and it can make a big difference when/if you have a claim.
Stated value insurance entitles you to the fair market value or the actual cash value of the vehicle immediately prior to loss. Seems straight forward, but not exactly, you see the insurance company hates paying out claims and will try and get away with paying you the absolute minimum they can and through the “Appraisal Clause” of a stated value insurance policy the insurance company can make sure they aren’t paying you anything close to the fair market value for your loss.
You really don’t know how good your insurance is until you have a claim. When it comes to the average daily driver stated values insurance policy they are all pretty competitive and this is the scenario. Car gets stolen or totaled in an accident, you file a claim, the insurance company estimates the value range of your car and offers you lowest value it thinks it can get away with. You know your car is worth more and through the Appraisal Clause of your policy have the right to get an impartial appraisal of your vehicle completed. At the same time the insurance company has to hire their own appraiser to actually research and document what ends up being e still low value of your car. Both of the hired appraisers meet and try and agree to the actual cash value of your car, if they can’t agree a third appraiser/umpire is hired and will decide the value of your car.
Barring any gross errors in either appraisal report most appraisers can agreed to a value they lies somewhere between their values, but if they are too far apart or they are just unwilling it goes to the 3rd party umpire/appraiser who will most likely split it down the middle and it will cost the insured and the insurance company roughly $1,000 each for the associated arbitration hearing fees. In the end you get something better than they offered, but less than your car was worth.
Really crappy Insurance companies like Liberty Mutual and Allstate really screw you over and have appraisal clauses that specify the umpire is to be chosen before the appraisers meet and the appraisers they hire won’t agree to anything other than their value. This forces the insured into an arbitration or take the insurance company's crappy offer. Of course you can pay to take it to arbitration, but the 3rd Party umpire/appraiser is going to split it down the middle and still cost you roughly $1,000 in arbitration fees.
Of course an agreed value insurance policy has no appraisal clause because you appraise the vehicle before you buy the policy. Therefore no surprises if you have a claim.
Lesson learned, you don’t know if you have good insurance until you have a claim, therefore read and understand the appraisal clause of your policy before you buy it. If you’re not sure, give us a call and well tell you what kind of appraisal Clause you have