Stated value Vs. Agreed value: What are the differences?

When investors purchase an asset, its value is the cost that they pay for it. However, this cost may not be the same as the amount that the market deems for its worth. On top of that, the issuer of the asset may also put a price over it. This price may not match the investor’s cost or the market’s evaluation. Usually, these values fall under different terms.

In most cases, the market value of an asset is relevant when it comes to determining its worth. It is the amount that a market deems the underlying asset to be worth. Several factors contribute to this value, the most prominent of which includes market forces. Apart from market value, however, investors may also come across other valuations.

For example, investors may encounter the par value or face value. These values are the amount the issuer sets for the underlying asset. However, these values do not contribute to its cost. On top of that, these terms apply to specific investments only, specifically bonds and stocks. In other industries, these terms may not exist or have a different meaning.

In some industries, the terms stated value and agreed value are more prevalent. Both of these refer to different amounts that relate to specific areas. In particular, these terms are relevant to the insurance industry. However, they may also apply to other instances. The differences between stated value and agreed value can become more apparent through their individual explanations.

What is the Stated value?

A stated value is an amount assigned to an asset, usually used for internal purposes. This value is similar to par or face value, which is the amount that appears on stock and bond certificates. Similarly, the stated value is a nominal amount, which companies usually use for internal accounting purposes. Like the par and face values, the stated value does not relate to the market value for an asset.

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In stocks, the stated value is the same as the par value for no-par value shares. Therefore, it is an interchangeable term that investors and issuers can use in that case. When companies don’t use a par value for their shares, they must still determine an amount for accounting purposes. This amount falls under the stated value, which helps companies record those shares in the financial statements.

Usually, companies set the stated value for their shares at a nominal amount. For most companies, this value falls between $0.01 and $1. This value plays a significant role in establishing the balance in the capital account. However, the stated value only applies to accounting in the case of no-par value shares. It may not impact other areas of a company’s operations. Instead, it only refers to an internal valuation for shares.

Stated value is also a prevalent term in the insurance industry. In that case, this value determines how an insurance company rates an asset. In particular, the stated value applies to vehicles. Therefore, it determines the value a provider can afford to insure a vehicle. This value is usually less than the asset’s worth in the market. In this regard, providers often confuse the stated and agreed values.

Overall, the stated value applies to different scenarios. When it comes to shares, particularly no-par value shares, this amount refers to an internal valuation. This value helps account for those shares in the internal records or financial statements. On the other hand, the stated value concept also applies to insurance. In this regard, it applies to coverage for classic cars. The provider sets the stated value for insurance.

What is the Agreed Value?

Agreed value is a term usually used in vehicle insurance. In that context, it also differs from the stated value for a vehicle. Agreed value is an amount that an insured and insurer agree a specific item is worth. In most cases, this item is a car or other similar products. The agreed value is also crucial in an agreed value vehicle insurance. It refers to a policy where the insured and insurance provider agrees on a covered item’s value.

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The agreed value is a mutual value that comes from both parties in an insurance transaction. Unlike the stated value, it is not a value set by the provider. Usually, it represents the guaranteed amount for insuring for the fixed amount in the event of a claim. The agreed value covers the full value of the underlying item. Therefore, it is more prevalent in the insurance of expensive and modified vehicles. In those cases, the agreed value helps both parties determine a price for it.

Another term used to describe the agreed value is the guaranteed value. It offers a higher degree of protection because the condition and depreciation of the covered item won’t result in lower payouts. However, it comes with an additional cost, which is typically higher than a standard policy. Usually, the insured must perform an appraisal of the underlying item before reaching its agreed value.

The insurance company and the insured agree on the item’s value before issuing the policy. As mentioned, however, the underlying vehicle must go through an appraisal, proving its value to the company. The agreed value also appears inside the policy, which also mentions the company will cover the items at the agreed value. As long as the policy is valid, the underlying item doesn’t depreciate.

Overall, the insured and insurance provider agree on the agreed value for the covered item. This value comes from an appraisal, which the insured usually performs. Once appraised, it provides a guaranteed amount for the insurance coverage. The agreed value can be crucial in the vehicle insurance sector, specifically for modified or expensive cars.

Stated value Vs. Agreed value: What are the differences?

In the vehicle insurance context, some people may confuse the stated value with the agreed value. However, they are two different amounts. With the agreed value insurance, both parties agree on the underlying item’s value. Usually, this value is at or close to what the actual worth of that vehicle is.

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However, the stated value determines how the insurance company rates a vehicle. It does not derive from an agreement between both parties. Instead, the insurance company sets the value, which becomes a part of the policy. In that sense, it’s the amount for which an insurer can afford to insure the underlying vehicle. However, this value is usually far lower than the item’s actual worth. Therefore, the stated value may be lower than the agreed value.

If a total loss occurs, the insurer must provide the agreed value to the insured regardless of the situation. Therefore, it does not come with an “actual cash value” criterion, which accompanies the stated value. The insurer also doesn’t charge depreciation on the agreed value. However, it will appraise this value after every policy term. In most cases, the agreed value policy is more beneficial to the insured.

Overall, the insurer usually determines which value will apply to an underlying vehicle. Every item will have specific needs. Therefore, it will be more suitable for the insurer to determine the value according to the situation. In some cases, the insured will have the choice between choosing one of them as well. However, they must consider the differences between stated value and agreed value before making a decision.


The stated value is an amount that an issuer sets for security for internal purposes. In insurance, it determines how the insurance company rates an asset, usually a vehicle. The agreed value, in contrast, is an amount agreed on by both parties in an insurance transaction. There are several differences between both of these, as mentioned above.