Agreed Value vs. Actual Cash Value: Which Insurance Policy is Right for You?

Making the right decision about your insurance coverage can save you a lot of money in the long run. When it comes to insuring your car, two of the most important decisions you'll need to make are:

1. What type of coverage do you need?
2. What value should you insure your car for?

The type of coverage you need depends on your individual circumstances. However, the value you insure your car for is a decision that can have a significant impact on your premiums.

There are two main types of car insurance policies: agreed value and actual cash value.

Agreed value policies pay you the amount that you and the insurance company agree on the value of your car, regardless of its actual cash value. This type of policy is typically more expensive than an actual cash value policy, but it can also provide you with more peace of mind.

Actual cash value policies pay you the actual cash value of your car at the time of the loss. This value is determined by taking the car's original purchase price and subtracting depreciation. Actual cash value policies are typically less expensive than agreed value policies, but they can also leave you with a smaller payout if your car is totaled.

Ultimately, the decision of whether to purchase an agreed value or actual cash value policy is a personal one. However, it is important to understand the difference between the two types of policies and to make an informed decision.

Success Stories

• A woman's car was totaled in a car accident. She had an agreed value policy, and the insurance company paid her the full agreed-upon value of her car, even though it was worth less than that at the time of the accident.
• A man's car was stolen. He had an actual cash value policy, and the insurance company only paid him the actual cash value of his car at the time of the theft, which was significantly less than what he had paid for it.
• A woman's car was damaged in a hailstorm. She had an agreed value policy, and the insurance company paid her the full agreed-upon value of her car, even though the damage was only cosmetic.

FAQs About Agreed Value vs. Actual Cash Value

• What is the difference between agreed value and actual cash value?

  Agreed value policies pay you the amount that you and the insurance company agree on the value of your car, regardless of its actual cash value. Actual cash value policies pay you the actual cash value of your car at the time of the loss.

• Which type of policy is right for me?

  The type of policy that is right for you depends on your individual circumstances. However, it is important to understand the difference between the two types of policies and to make an informed decision.

• How much does an agreed value policy cost?

  Agreed value policies are typically more expensive than actual cash value policies. However, the cost of your policy will vary depending on a number of factors, including the make and model of your car, your driving history, and your location.

Call to Action

If you are considering purchasing car insurance, it is important to understand the difference between agreed value and actual cash value policies. By making an informed decision, you can choose the type of policy that is right for you and protect yourself financially in the event of a loss.