Purchasing auto insurance can be tricky. That’s especially true for vehicle owners who are not aware of the different types of coverage they can secure. One that you need to understand well is known as stated value car insurance Seattle. In some instance, this type of coverage may be fine. At other times, it will not be in your best interests. Here are some basics that you should know in order to make the best choices.
Stated Value and Insurance Premiums
With stated value, you literally come up with a maximum value that is acceptable for you and for the insurance provider. That value does not have to equal current market value or any other figure that could be identified. In many cases, a customer may want to go with a stated value as a way to save money on insurance premiums.
Consider this example: you inherit a vehicle that’s worth a great deal of money. That’s fine, but that value would mean that you have to pay insurance premiums that don’t fit easily into your household budget. It’s possible to opt for a stated value that’s lower than the actual value. In this way, you still have auto coverage that’s still in compliance with local laws and standards. At the same time, you have lower insurance premiums.
Stated Value and Minor Repairs
Even if you go with a stated rather than actual value, the coverage will likely be enough to take care of any minor repairs after an accident. In this sense, the terms of the policy will serve you well. You can take the car to an authorized shop, have the work done, pay any amount remaining after the insurance covers most of the expense, and continue to drive your vehicle.
The issue may be more complex if your vehicle needs significant repairs after a traffic accident. You could end up having to pay more out of pocket. Depending on the amount, going with stated value insurance could cost you quite a bit even after your factor in the savings from those lower insurance premiums.
What About Stated Value and Totaling a Wrecked Vehicle?
The real issue with stated value comes into play if your vehicle ends up being totaled. Instead of going with the actual market value, the insurance company will not pay more than the stated value. That means if you are driving around in a $100,000 vehicle and the stated value in the policy is $50,000, don’t expect the insurance company to provide more than that $50k.
How Does Stated Value Compare to the Agreed Value?
Some people confuse stated value with agreed value. That’s understandable in a way, since the insurance provider and the vehicle owner agree to the stated value. Still, there’s a major difference.
The agreed value is based on the results of an inspection that includes researching the vehicle history, conducting a thorough evaluation of every aspect of the car or truck, and comparing the make and model to the current market value at the time the policy is activated. Typically, the agreed value is more than the stated value, something that will come in handy if the car is in an accident and ultimately totaled.
Stated value insurance coverage may work fine in some cases, but it’s not for everyone. Choose the nature of the coverage carefully and understand what it will and will not do in specific situations. Once you understand how stated value works, you can decide if it’s an option that’s right in this particular instance.
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