What type of insurance policy will assure an owner is paid enough to replace a classic car with a similar one?

An agreed value policy is specifically designed to meet the needs of owners of classic or valuable cars by ensuring that a predetermined amount is set as the value of the vehicle. This means that both the insurer and the insured agree on a specific value for the car at the start of the policy, which will be the amount paid out in the event of a total loss, regardless of depreciation or market value at the time of the claim.

This type of coverage is particularly beneficial for classic cars, as their value can be subjective and may appreciate over time due to rarity or collector demand. By having an agreed value, the owner can be assured they will receive enough compensation to replace their vehicle with a similar one, reflecting its true worth.

Other types of policies, such as a first loss policy, cover only specific amounts up to a certain limit and would not guarantee full replacement value. A new for old policy typically applies to newer vehicles, providing replacement coverage for a car that is less than a certain age, and may not serve the same purpose for classic cars. Finally, the Reinstatement Memorandum involves conditions regarding the rebuilding or reinstating a property which may not fully secure the owner's intention to replace a classic car with a similar model.