What is an agreed value car insurance policy?
An agreed value car insurance policy guarantees a pre-set payout if your vehicle is written off or stolen, rather than relying on the insurer’s assessment of its market value at the time of the claim.
This makes it a preferred option for owners of classic, modified, or rare vehicles, where depreciation or lack of comparable market data could otherwise lead to a lower payout.
While standard car insurance typically pays out the vehicle’s market value, subject to depreciation and the insurer’s interpretation, an agreed value policy locks in a specific amount upfront. That figure is usually based on valuation evidence provided by the policyholder and approved by the insurer when the policy is taken out. If your car is later written off or stolen beyond recovery, that pre-agreed sum is what you’ll receive, minus any applicable excess.
These policies are particularly relevant for enthusiasts, collectors, and owners of cars with custom features or sentimental value. It’s also important to note that some specialist insurers require vehicles to be kept under certain conditions (such as being garaged or driven on limited mileage) to qualify for agreed value cover. And while premiums may be higher, the peace of mind it offers, knowing your investment is protected on your terms, often outweighs the extra cost.
How does an agreed value policy work?
An agreed value policy pays out a pre-approved amount if your car is written off or stolen, regardless of its current market value.
This amount is fixed at the start of the policy and does not change during the policy term, even if your car depreciates.
The agreed value is set based on evidence provided by you, the policyholder. This could include photographs, independent valuations, invoices for modifications, and maintenance records. The insurer reviews this and, if satisfied, confirms the agreed value in your policy documents. Once set, that figure becomes the maximum payout in the event of a total loss.
Unlike market value policies, which base payouts on fluctuating vehicle prices, agreed value removes the uncertainty. This is particularly helpful for owners of rare, restored, or modified vehicles that might otherwise be undervalued. It also provides a clearer picture of your financial exposure, especially if your car has appreciated or has parts and labour not reflected in guide prices.
Some insurers may require annual revalidation of the agreed amount, especially if your car continues to increase in value or is further modified. Others lock the value for the life of the policy. Either way, it’s critical to keep documentation up to date so you can justify the insured figure if needed.
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Get QuotesWhy would you choose agreed value insurance?
Agreed value insurance provides financial certainty for car owners whose vehicles are hard to value or would be undervalued under standard market-based policies.
It ensures that, in the event of a total loss, you receive a fixed payout that reflects your car’s true worth to you—not just what it’s listed for in a price guide.
This type of policy is especially attractive to drivers with:
- Classic or vintage cars where market values are inconsistent or rising
- Modified vehicles where time, parts, and customisation aren’t properly reflected in resale prices
- Imported or rare models not commonly listed in UK valuation tools
- Cars with sentimental or collector’s value, such as restorations or one-off editions
Take the example of a 1978 Porsche 911 restored over several years. A market-value policy might price it based on general auction data, disregarding upgrades or immaculate condition. With agreed value, you set the payout amount upfront with your insurer, using documentation to back up its worth.
For anyone investing significant money or effort into their car, agreed value is about more than just cover—it’s about control. You’re not leaving it to chance or algorithms. Instead, you’ve already done the negotiation before the worst-case scenario ever happens.
Do all insurers offer agreed value policies?
No, not all insurers provide agreed value car insurance. This type of cover is typically offered by specialist providers rather than mainstream insurers.
It requires a more manual underwriting process, which many standard providers avoid.
Agreed value policies are commonly found through insurers that focus on:
- Classic and vintage car cover
- Modified or performance vehicle insurance
- Import and grey market car protection
- Limited mileage or enthusiast-focused policies
Mainstream providers may occasionally offer agreed value options, but they usually come with conditions—such as the car being over a certain age, or the policyholder proving the vehicle’s value through third-party assessments. In most cases, however, if you want this level of control and certainty, you’ll be looking at specialist insurers with more tailored products.
You’ll also find that some insurers only offer agreed value to existing customers, or only for cars that meet specific eligibility criteria. These may include garaging requirements, mileage caps, or a minimum spend on restoration.
If agreed value is important to you, start by researching insurers that explicitly list it in their core offering. Trying to retrofit it into a standard policy rarely works and may leave you underprotected if things go wrong.
What is the difference between market value and agreed value?
Market value policies pay what your car is worth at the time of a claim, whereas agreed value policies pay a fixed, pre-approved sum regardless of depreciation or fluctuating prices.
This fundamental difference affects both the claims process and your long-term financial risk.
With market value cover, your insurer will typically reference trade guides or valuation tools like Glass’s Guide or CAP to assess what your vehicle might sell for just before the incident. This works well for everyday cars with standard depreciation curves, but it often undervalues unique, classic, or modified vehicles.
Agreed value, on the other hand, involves agreeing on the payout figure when the policy starts. That figure stays locked for the duration of the policy (unless reviewed). It reflects your car’s worth based on what you and your insurer have documented—not what the market says months or years later.
Here’s a simple comparison:
| Feature | Market Value | Agreed Value |
|---|---|---|
| Payout Basis | Current market price at claim time | Pre-agreed fixed value |
| Subject to Depreciation | Yes | No |
| Ideal For | Standard vehicles | Classics, modified, rare or collector cars |
| Valuation Evidence | Not typically required | Required upfront (photos, valuations, etc.) |
If you’ve invested time or money into your car beyond its market value, relying on a market value policy could leave you short. Agreed value gives peace of mind that you’ll be fairly compensated based on what your car is actually worth to you.
How do you get an agreed value approved?
To get an agreed value approved, you usually need to provide documentation that justifies your car’s worth—this often includes photographs, receipts, and possibly a third-party valuation.
The insurer will use this evidence to decide whether they accept your suggested value.
Most specialist insurers have a set process for this. It typically begins with a valuation form, where you propose an amount and include supporting documents. These may include:
- A recent professional valuation from a recognised appraiser
- Detailed photographs of the car, including interior, engine bay, and mileage
- Restoration receipts or modification invoices
- Historical service records
Some insurers might also request you to complete a condition report or even inspect the vehicle in person. Once the evidence is reviewed and the value agreed, it’s written into your policy. This figure will remain fixed for the duration of the policy unless a new valuation is submitted upon renewal.
It’s worth noting that if you overestimate your car’s value, insurers may either reject the figure or ask for more evidence. Be realistic and thorough—this is about accuracy, not aspiration.
Why might an agreed value policy cost more?
Agreed value policies often cost more because they remove ambiguity and financial risk for the policyholder, while increasing liability for the insurer.
You’re locking in a guaranteed payout, which insurers must honour regardless of market fluctuations.
This fixed-value arrangement means you’re likely to receive a higher payout in the event of a total loss compared to a standard market value policy. Insurers price in that additional risk, especially if the vehicle’s agreed value includes modifications, rare parts, or restoration work that wouldn’t be accounted for under normal depreciation models.
Premiums may also rise due to:
- The added underwriting time required to review evidence and approve the valuation
- The higher sum insured, which increases the potential payout
- Increased fraud prevention checks
- Limited availability among providers, often placing policies in a more niche, less competitive market
Let’s say your classic car is worth £18,000 to you, but the current market might value it at £13,000. That £5,000 difference is effectively an insurance guarantee—and the premium will reflect that certainty.
You’re not just paying for car insurance. You’re paying for peace of mind, knowing that if the worst happens, your insurer won’t haggle over value.
Do you need agreed value insurance for a classic car?
Yes, if you own a classic car, agreed value insurance is usually the best way to ensure you’re properly covered in the event of a total loss.
Standard policies typically don’t reflect the true value of vintage or collector vehicles.
Classic cars don’t depreciate like modern vehicles. In fact, many appreciate over time or hold their value due to rarity, restoration, or historical importance. A market value policy, which bases payouts on typical resale prices, can significantly undervalue these types of cars.
Take, for example, a 1968 Jaguar E-Type. If you’ve spent thousands restoring it, a standard insurer may still calculate its worth based on general second-hand values. You might receive a payout that doesn’t come close to replacement or restoration costs.
An agreed value policy eliminates that gap. It locks in a realistic payout figure, based on documented value and mutual agreement with the insurer. That means if the car is written off or stolen, there’s no argument or compromise. You’re paid what it was worth to you at the time the policy was set up.
For classic car owners, especially those who exhibit or drive sparingly, agreed value is not just useful—it’s essential.
Can you get agreed value insurance on a modified car?
Yes, agreed value insurance is available for modified cars, but you’ll need to prove the value of modifications and upgrades with detailed evidence.
This helps insurers assess the true replacement cost if your vehicle is written off.
Modifications often fall outside standard valuation databases. Whether it’s performance tuning, bodywork, a full respray, or specialist audio equipment, these changes may significantly increase a car’s worth beyond its base model. Without an agreed value policy, you’d likely receive a market-based payout that ignores those custom upgrades.
To secure agreed value cover for a modified vehicle, insurers typically request:
- A full list of modifications and who carried them out
- Invoices for work and parts
- High-quality photos documenting the changes
- Proof that modifications were declared at policy inception
Some insurers may also insist the modifications are professionally fitted and legal for UK road use. If they accept the declared value, it becomes part of the policy—just like with classic car cover.
This type of policy is popular among car enthusiasts, show car owners, and anyone who has put time and money into customising their vehicle. It protects your investment and avoids payout disputes after a claim.
Does agreed value insurance apply to lease or PCP vehicles?
No, agreed value insurance typically doesn’t apply to lease or PCP (Personal Contract Purchase) vehicles, because you don’t legally own the car outright.
These finance arrangements transfer ownership to the driver only after all payments are completed.
In a lease, the finance company retains full ownership throughout. In a PCP agreement, the same applies until the balloon payment is made at the end of the term. Since you don’t technically own the asset, you can’t insure it for an agreed value in the way you would a privately owned vehicle.
Instead, insurers usually apply standard market value cover, or in some cases, offer Guaranteed Asset Protection (GAP) insurance. GAP insurance is specifically designed to cover the shortfall between what your car is worth and what you owe the finance company if the car is written off or stolen.
So while agreed value isn’t an option for leased or PCP vehicles, there are alternative protections to avoid being left out of pocket.
How do you agree the value with your insurer?
To agree the value of your car with your insurer, you’ll typically need to provide detailed evidence of its worth, which the insurer then reviews and either accepts, rejects, or negotiates.
This process is essential to setting a fair and fixed payout figure.
Documentation is everything. Insurers want clear proof that the figure you’re suggesting is realistic. That usually includes:
- A recent professional valuation from a specialist or recognised garage
- High-resolution photos of the vehicle, inside and out
- A full service history and MOT records
- Invoices or receipts for restoration or modifications
Some insurers may also request an independent inspection, especially for classic or high-value cars. The goal is to remove ambiguity. Once agreed, the value is locked into the policy and remains fixed unless reviewed or adjusted at renewal.
Keep in mind that values can change year to year. Classic cars may appreciate, while modified cars might fluctuate based on trends. It’s worth checking annually that your agreed value still reflects your vehicle’s condition and market reality.
Without this process, you risk underinsurance. A payout based on an outdated or vague valuation can leave you thousands short. That’s why the agreed value process matters—and why thorough documentation is your best ally.
Do you pay more for agreed value car insurance?
Yes, agreed value car insurance typically costs more than a standard policy, because it guarantees a fixed payout rather than relying on fluctuating market values.
The insurer takes on more risk, especially with appreciating or heavily modified vehicles.
This added premium reflects several factors:
- Higher potential payout: Unlike standard insurance, agreed value doesn’t depreciate over time. If your car is written off, you’ll receive the full agreed amount.
- Specialist assessment: Some policies require an independent valuation or appraisal, which may be an additional upfront cost.
- Niche underwriting: Agreed value policies are often written by specialist or classic car insurers, which may come at a premium compared to mainstream providers.
For example, if a classic Mini is insured under a standard policy and is written off, the payout might be £5,000 based on market rates. With an agreed value policy, the same Mini could be insured for £12,000 based on its restored condition. That increased payout potential is why the premium may be 10–20% higher, depending on the insurer.
However, for owners of rare, restored, or customised vehicles, the extra cost can be a smart investment. It ensures financial protection that truly reflects the car’s unique value, rather than a figure pulled from an outdated trade valuation.
Final thoughts
Agreed value car insurance isn’t for everyone, but for the right vehicle, it offers tailored protection that standard policies simply can’t match. Whether you drive a cherished classic, a modified sports car, or a rare collector’s piece, this type of cover guarantees clarity and peace of mind. You know exactly what your payout would be in the worst-case scenario, without having to haggle over fluctuating market values.
But it’s not just about the car. It’s also about your expectations. If you’ve invested time, money, and emotion into your vehicle, the last thing you want is to face a shortfall if it’s written off. That’s where agreed value earns its place. Yes, it may cost more, and yes, the documentation burden is higher—but in return, you gain a policy that’s built around the reality of what your car is worth to you and the market.
Just be sure to review the valuation regularly and understand any policy conditions. Agreed value is not a one-size-fits-all product, but for many specialist vehicles, it’s the right choice.
Frequently Asked Questions (FAQs)
No, agreed value insurance is commonly used for classic cars, but it’s also suitable for modified, high-value, rare, or collector vehicles where market valuation may fall short.
No, not all insurers provide this type of policy. It’s typically available through specialist or niche insurance providers, often catering to enthusiasts or collectors.
Yes, the agreed value can be reviewed and adjusted at renewal. If your vehicle appreciates, or if you invest further into it, a revaluation may be needed to stay protected.
In many cases, yes. Some insurers require a formal valuation from a recognised specialist or appraisal company, especially for high-value or heavily modified vehicles.
Yes. With agreed value, the payout is fixed and pre-determined. This avoids disputes during the claims process, unlike standard policies where depreciation can reduce your settlement.
No, agreed value insurance is not typically available as short-term or temporary cover. It’s designed for long-term policies and requires in-depth underwriting.
If the insurer disputes your declared value, they may request more documentation or a professional valuation. They’ll only offer agreed value cover once they’re satisfied with the evidence.
Yes. Even if a vehicle is off-road, stored, or declared SORN, agreed value cover can protect it against theft, fire, or accidental damage—important for investment-grade or collector cars.