Agreed Value Modified Car Insurance | Protect Your Custom Car Investment

Introduction

For a modified car, the key question is not simply whether a policy is described as “agreed value”. It is whether the insurer has accepted the vehicle and its modifications, and whether the agreed amount and relevant items are recorded in the policy documents. This matters because a custom build may have features that are not obvious from the base vehicle’s ordinary resale value.

As at 17 August 2026, our editorial review finds that agreed value and market value are different ways a motor policy may assess a vehicle. Neither label removes the need to disclose modifications, read the current wording, and keep the car roadworthy. This is general information, not personal insurance advice.

For a broader starting point, see our car insurance guide.

Agreed value vs market value

The Insurance Council of New Zealand (ICNZ) describes market value as what the vehicle was worth immediately before the damage. Agreed value is a value agreed with the insurer at the beginning of the contract and at each renewal.

With agreed value cover, the relevant amount is not a figure an owner sets alone. It is the amount the insurer has agreed to insure and that appears in the policy schedule. For example, AA Insurance’s comprehensive-car wording defines agreed value as the amount in the schedule and states that it includes the value of modifications and accessories. That is insurer-specific wording, so do not assume another insurer uses identical terms.

What agreed value does—and does not—do

An agreed value can make the insured amount easier to identify before a total-loss claim. However, it is not a blanket promise that every loss, part or later alteration will be paid. Cover and settlement remain subject to the policy wording, the nature of the claim, applicable excesses, exclusions, and whether the insurer accepted the modifications.

For a total loss, an insurer may pay the agreed value shown in the schedule, less applicable excesses and subject to policy terms. The practical protection comes from having an accurate, accepted value and clear documentation—not from relying on the phrase “agreed value” alone.

Declare every relevant modification

Disclosure is central to modified-car insurance. Consumer Protection NZ says consumers should tell their insurer if a car has been altered, including if it has been lowered, custom painted or performance boosted. It also advises customers to provide honest, complete, up-to-date and relevant information at application, renewal, claim time, and when circumstances change.

State’s current policy wording illustrates how serious this can be: where a required modification has not been disclosed, it says nothing is covered under the policy. Its examples include engine, suspension, chassis and aftermarket custom paintwork. This is not a statement that every insurer has the same consequence; it is a strong reason to ask your own insurer exactly what it requires.

Keep a useful build record

Before requesting a quote, renewal review or change to cover, our team recommends preparing a clear list of modifications and accessories. Keep invoices, photographs, specifications, installation records and any independent valuation requested by the insurer. Insurers set their own underwriting and valuation-evidence requirements, so an appraisal may be requested in some cases but should not be assumed to be universally required.

Review the value at renewal and after changes

Agreed value is not necessarily fixed for the life of the car. AA Insurance’s current wording says it reviews and sets a new agreed value at renewal using depreciation and reasonable retail value, and says the value will usually decrease with age and use. Check the renewal schedule carefully, particularly where the car has had additional work, has unusual condition or rarity considerations, or the proposed amount no longer appears appropriate.

Contact the insurer before or as soon as circumstances change, rather than waiting for renewal. A new turbo, suspension work, a repaint or other alteration may affect both acceptance and the value the insurer is prepared to record.

Roadworthiness and LVV certification are separate but important

Insurance acceptance does not replace vehicle-compliance requirements. NZ Transport Agency Waka Kotahi (NZTA) says heavily modified vehicles need Low Volume Vehicle (LVV) certification before a warrant of fitness (WoF) can be obtained, and further changes may require further certification.

Not every modification needs LVV certification. NZTA’s inspection guidance says all modifications must meet WoF or certificate-of-fitness requirements, while certification depends on modification-specific thresholds and conditions. Its engine-modification guidance identifies fitting or upgrading a turbocharger or supercharger, and re-chipping ECUs on turbo vehicles, as modifications requiring LVV certification. Check the current NZTA and LVV requirements for the specific work on your car.

Questions to ask before you buy or renew

• Has the insurer accepted each relevant modification and accessory?
• Which items are included in the agreed value recorded on the schedule?
• What evidence does the insurer need now and after future changes?
• How will the agreed value be reviewed or reset at renewal?
• What excesses, exclusions, limits and claim conditions apply?
• Does the vehicle need LVV certification, and is its compliance documentation current?

Practical Takeaway

1. List the base vehicle, every modification and every accessory that may affect cover or value.
2. Give the insurer complete, current information and obtain confirmation of what it has accepted.
3. Read the schedule alongside the latest policy wording; the schedule is particularly important for agreed value.
4. Keep your evidence and vehicle-compliance documents organised.
5. At every renewal and after substantial work, reassess whether the recorded value and disclosure remain accurate.

Agreed value may be worth considering where a modified vehicle’s accepted insured value needs to be clearly recorded. Its suitability depends on the particular car, insurer acceptance, policy terms and price. Compare current policy documents rather than treating any cover type as automatically best.

References

• Insurance Council of New Zealand — Motor Insurance: What You Need to Know
• AA Insurance — Comprehensive Car Insurance Policy
• State Insurance — Car Insurance Policy Wording
• Consumer Protection NZ — Car insurance
• Consumer Protection NZ — Insurance
• NZ Transport Agency Waka Kotahi — Modifying your vehicle
• NZ Transport Agency Waka Kotahi — In-service VIRM: modifications that do not require LVV certification
• NZ Transport Agency Waka Kotahi — In-service VIRM: engine modification requirements

Author / Editorial Team

This article was produced by Insurspy’s internal editorial and research team. In our editorial review, we compare public policy information and prioritise authoritative New Zealand government, industry and insurer sources. We review content for accuracy and practical usefulness, but policy wording, eligibility and cover can change; always check the latest documents provided by the insurer.