When you are seeking insurance for a vehicle, there’s a good chance that the agent will want to talk with you about stated value coverage. This approach tends to be the default for many insurance companies, although they are also likely to offer what’s known as agreed value or guaranteed value coverage. Before you accept any offer, here are some basics that you should know about stated value car insurance and when it’s a good solution.
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Stated Value is Determined By the Amount Set in the Policy Terms and Conditions
With stated value, both parties arrive at a maximum figure that serves as the worth of the vehicle. It may be based on factors like the current market value for the make and model, the demand in the local market, and the general condition of the car. That value will remain in effect for the term of coverage you are choosing to enter. That term is often six months, but it may be up to year.
The stated value can be reevaluated in preparation for the upcoming renewal period. The insurance provider will notify you if there’s a change. You can then decide whether you want to renew the policy or if you want to compare the offer with what other providers have to offer.
The Stated Value Determines the Premium You Will Pay
Some people think that the stated value focuses on the maximum amount of coverage you can lock in. In fact, it’s used more to determine the type of premium that you will need to pay in order to secure the scope and amount of coverage that you want.
This means the stated value does not determine exactly what you would get paid if a covered event took place. It does provide you with the ability to secure coverage that’s in compliance with local laws while still keeping the costs within the limits of your budget.
You Can Select a Stated Value That’s Lower Than the Current Market Value
One thing that you may not know is that you don’t necessarily have to go with the figure provided as part of the offer for the stated value car insurance. It is possible to select a value for the vehicle that’s lower than the current market value that the provider used to come up with the quote.
Why would you want to do this? Along with opting for higher deductibles, this is one more way to keep the premiums a little lower. If you need to watch expenses closely but still want to have a comprehensive policy, this approach may work for you. Keep in mind that you can always talk with the agent about revisiting the lower value that you requested as your financial circumstances improve.
The Provider May Have the Option of Paying Out Based on the Stated Value or the Actual Cash Value
It pays to look at the terms and conditions that apply to the scope of your stated value coverage. One thing you may not realize is that the provider has some leeway in deciding hat to pay out on a claim.
The stated value may be more or less than the actual cash value of your vehicle. If that’s true, then the provider is likely to offer to settle claims using whichever figure is lower. You may be able to use the results from an appraisal to seek the greater amount, but keep in mind that may take time and there’s no guarantee of success.
Make sure you know what’s include in the policy terms and conditions, including what sort of payout you can expect if a covered event does take place. Ask plenty of questions and listen closely to the responses. You may find that this type of coverage works well, or that opting for a guaranteed value policy would be a better choice.
