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In its native Uruguay, it’s a pretty well-known car: the pale blue Beetle owned and driven everywhere by the famously humble president Jose Mujica is something of a national icon.

When the former leftwing guerilla leader came to power in 2010 he memorably declared the car was the sum of his worldly wealth, which he had kept for so long to transport his three-legged dog Manuela.

The bare facts are that, on paper, it’s just a bog standard and well-used 1987 Beetle.

But the president, affectionately nicknamed Pepe, revealed that an un-named Arab Sheikh had offered him a staggering $1million for the car at a G77 summit in Bolivia.

Incredibly, the man who gave over his presidential palace for use as a state shelter for the homeless, turned down the offer, saying he “didn’€™t give it any importance” and would have given the money away to charity.

But is it possible for a Beetle to be worth $1million?

Peter Cook, of Herts Insurance Consultants (HIC), said there were many factors to consider when deciding on the value of a vehicle, and what somebody is prepared to pay is certainly a part of it.

HIC provides agreed value cover for classic, modified and collectable cars, and has specialised in Beetles and VW camper vans for many years.

“When looking at vehicle values, we take into account a number of things – condition, mileage, rarity and the market rate for other similar vehicles,” said Peter.

“Obviously with a vehicle which has a well-known history, the value can be higher than for similar cars of the same make, so the price someone is prepared to pay can carry more weight …”

Each car submitted to HIC’€™s team of valuers will be assessed before an insurable value can be agreed, but Peter said the broker could insure pretty much anything on four wheels.

“We keep a close eye on market trends so we’re always up to date with the correct current values and we can make sure your car is covered for the correct amount,”€ he added.

Classic cars – especially at the top end of the market (Porsche, Ferrari and Mercedes in particular) – have proved recession proof investment in recent years.

Research from the Historic Automobile Group International shows classic car prices have increased by a compound average of 12 per cent a year for the past 30 years, while the Knight Frank Luxury Investment Index shows a 456 per cent increase in the past decade.

Peter said the owners who failed to keep track of their vehicle’s value could be several thousand pounds light should the worst happen.

“It pays to keep an eye on your current insured value – with prices having risen so much it’s entirely possible that people with certain models are seriously under-insured,” he added.

Getting agreed value insurance is a fairly simple process – just take several photographs showing your car from different angles, complete an agreed value application and provide any relevant receipts for any work you’ve had done, pay a small fee and await HIC’s agreement.

Most insurers require re-certification every two years, from their point of view to ensure the car hasn’t deteriorated or depreciated in the previous two years. But, with some sectors of the classic car market showing sustained increases in values, it’s also in your interests to keep a sharp eye on the value of your car.

You can also update your value at any point during your policy’s term, but you will need to supply new photographs, vehicle declaration and payment of the fee.