Classic cars have become a massive industry for hobbyists, collectors, and investors. Older models and hard to find originals have become a point of pride in the collection of car enthusiasts all over the world. Ownership of a classic car is a little trickier than the standard transportation that most of us have sitting on the driveway.

Insuring a classic car, for instance, requires a lot more legwork than the standard insurance policy that you might take out on your everyday set of wheels. Coverage options are more limited, and car insurance quotes can often be higher than on the standard car insurance policy. Still, the protection offered with an agreed value on your classic car is something you can’t replicate without this additional level of protection. Here’s how you can determine your car’s insurance value.

What is the market value of your vehicle?

It might be helpful, to begin with, the idea of a car’s market value. All cars are priced based on a number of factors, but for the vast majority of vehicles, this is based on a combination of age and mileage. This is because most vehicles are used as primary modes of transportation and not as collector’s items or investments.

Buying a car at your local dealership will result in the typical interaction in which a car’s make and model are the foundation for its pricing structure, and these age factors create a deduction from the base price of a new version of the car. Additionally, a buyer can expect a discount for a used car with damage from an accident or a variety of faults within the vehicle. No car is perfect, and the price reflects these in the form of standard deduction and discounts.

However, the car’s value for the purposes of insurance is based primarily on the age factors and less on the condition of superficial elements of the vehicle. Cars are mechanical objects, and auto insurers treat them essentially as the sum of their parts when issuing a car insurance policy, minus the wear and tear that time and use creates. Insurers care primarily about your driving record and the car’s ability to perform when issuing an auto insurance quote and the corresponding value in the event of a total loss or other collision-related property damage. Your vehicle’s market value is equivalent to the price that your insurance company will payout in the event of a total loss. It’s important to note that this figure isn’t always the value you paid for the car, nor is it typically enough to cover the purchase of a new vehicle because of the adjustment of price based on inflation year over year.

Creating Agreed Value as a New Coverage Option

Antique car collectors instead opt for additional coverage in many cases. A collector car is often worth much more than its face value as an object. This follows the same principle as a signed collector item. The signature alters the value, sometimes adding an order of magnitude to its resale price. The same is true for classic cars. Many of these older models—if they still boast original parts or are refurbished to exacting standards—are worth a pretty penny, far and above their market value based on the traditional factoring of mileage and age. This pricing model is based on the Kelley Blue Book formula and prevails across world car sales. Of course, this select segment of the automobile market really doesn’t correspond to the prevailing market conditions. As classic cars become older, their value actually increases because parts become harder to find and complete models continue to break down.

Utilizing an agreed-upon value for their car insurance policy on any classic vehicle they own is something that classic car owners are opting for with their insurers. This will cost you a premium of course, but rather than having the vehicle appraised after suffering property damage or in the event of a total loss, you can evaluate the actual financial value of the vehicle and have it insured for that amount—or another, higher value, as long as you’re willing to pay for it.

This option gives classic car owners peace of mind when it comes to driving their prized possessions out on the open road. Instead of keeping these beauties locked away safely, you can enjoy your antique or specialty vehicle as it was meant to be used.