“Agreed-upon value” vs “Stated value” vs “Market value”
When a vehicle is declared a total loss, the most important question isn’t how the accident happened or who was at fault—it’s how the car will be valued. That single definition determines whether the settlement feels fair, frustrating, or outright shocking.
This article breaks down the three valuation methods most commonly encountered in auto insurance—market value, stated value, and agreed-upon value—how they work in practice, where people get tripped up, and why choosing the wrong one can change the entire total-loss experience.
Why valuation—not premium—decides a total loss
Valuation answers the question every total loss comes down to: “What does the insurer owe me for this car?”
- Premium buys access: It gets you into the claim process—but it does not define the payout.
- Limits cap payment: They set the maximum, but valuation determines the actual number.
- Definitions rule outcomes: Two identical cars with different valuation language can settle for wildly different amounts.
In a total loss, valuation isn’t a detail—it’s the decision.
Market value: the default—and the surprise
Market value (often called Actual Cash Value, or ACV) is how most standard auto policies settle total losses.
- How it works: The insurer estimates what your vehicle was worth immediately before the loss, based on local market data.
- What’s considered: Year, make, model, mileage, condition, options, and comparable sales.
- What’s not guaranteed: Original purchase price, loan balance, emotional value, or upgrade costs.
Market value is objective—but it doesn’t care what you paid or what the car meant to you.
Where market value works well
- Late-model, mass-produced vehicles
- Cars with active resale markets
- Vehicles without major customization
Stated value: the most misunderstood option
“Stated value” sounds reassuring—but it rarely means what people think it means.
- What stated value is: A value you declare for rating and underwriting purposes.
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What it is not:
A guaranteed payout amount.
In many policies, the insurer pays the lesser of stated value or market value.
- Why it exists: To allow higher premiums on modified or higher-risk vehicles without guaranteeing settlement.
Stated value affects what you pay—often not what you get.
Common stated-value pitfalls
- Custom work not reflected in market comps
- Owners assuming the “stated” number is locked in
- Higher premiums without higher protection
Agreed-upon value: certainty before the loss
Agreed-upon value removes debate by fixing the settlement amount in advance.
- How it works: You and the insurer agree upfront on the vehicle’s value, documented on the policy.
- What gets paid: The agreed amount in the event of a total loss—no depreciation, no market arguments.
- What’s required: Appraisals, build sheets, photos, receipts, and periodic updates.
Agreed value turns a total loss into a known outcome.
Best uses for agreed value
- Classic and collector vehicles
- Heavily modified or custom builds
- Exotics, restorations, and limited-production cars
How the same total loss settles three different ways
The fastest way to understand valuation is to see it applied.
- Market value: Settlement based on comps; upgrades may be partially or entirely ignored.
- Stated value: Settlement capped at market value—even if you paid premiums on a higher number.
- Agreed-upon value: Check written for the agreed amount, subject to policy terms.
The accident may be random—the settlement method is not.
How drivers accidentally misinsure valuable vehicles
Most valuation problems start long before the claim.
- Assuming “stated” means guaranteed: It usually doesn’t—read the settlement clause carefully.
- Skipping documentation: Modifications without proof are hard to defend after a loss.
- Using standard policies for non-standard cars: Specialty vehicles often need specialty carriers and forms.
If the value isn’t defined before the loss, it will be debated after.
Common auto valuation questions
Is market value the same as what I owe on the car?
No. Loan balance and market value are unrelated; GAP coverage addresses this difference.
Can agreed value go down?
It can if appraisals aren’t updated or market conditions change—policies require maintenance.
Is agreed value always better?
Not always. It costs more and only makes sense when market value doesn’t reflect reality.
Valuation language decides the total-loss experience
Market value prioritizes objectivity, stated value prioritizes rating flexibility, and agreed-upon value prioritizes certainty. For standard vehicles, market value is usually sufficient. For rare, custom, or heavily modified cars, the wrong definition can turn a total loss into a long argument. The right one turns it into a known outcome.