The Basics of Classic Car
Insurance
In order
to secure the best auto
insurance premiums, the
owners of classic cars and
trucks are best served by
working with specialty
insurance firms that
recognize the unique
characteristics of their
vehicles and the fact that
they will appreciate, rather
than depreciate in value
over time. Factors like
level of use, method of
storage, and manner of
restoration and maintenance
are key in finding and
keeping affordable,
comprehensive coverage.
Going into
the process, owners need to
determine for themselves
what constitutes
“comprehensive” coverage in
their given situation.
Questions to consider
include:
- Am I
in a financial position
to insure the car for
its real value?
- Am I
going to be
participating in a
sufficient number of car
club-sponsored events to
incur additional
liability?
- Am I
going to need extra
coverage while
restoration work is
underway on my car?
- Am I
willing to accept an
annual mileage allowance
in exchange for lower
premiums?
- Am I
going to need to have
this car shipped and
will I need extra
coverage for that?
- Is my
car protected against
both theft and damage
while it’s in the shop
and if so, does my
policy or my mechanic’s
(or both) provide that
protection?
Standard automotive policies
are not written in such a
way as to address the
investment drivers make in
classic vehicles or the
circumstances under which
those cars are used and
maintained. Premiums on
standard policies will be
exorbitant and benefits
scant.
As the owner of a classic, you’ll need to
negotiate your coverage with
an insurance professional at
a specialty firm. In
preparation for that
meeting, you need to
understand the industry
lingo.
Stated
Value
A stated
value policy will provide
benefits for the cost of
needed repairs or the stated
value of the car, whichever
is less. This is not the
kind of policy classic
owners want.
- The
stated value is only
used to set the the
level of the premium.
The greater the stated
value, the higher the
premium.
- When
a claim is filed, the
insurer is under no
obligation to use the
stated value amount.
Instead, the company
will determines an
actual cash value and
pay that amount.
Never forget
that an insurance company
will always pay the least it
can get away with under the
terms of the coverage.
Agreed Value
The best
protection for classic lies
in agreed value policies. A
set amount of coverage is
agreed upon at the time the
policy is issued. Thus:
-
Owners can secure an
appraisal that
accurately represents
the car’s value and that
of any modifications
made to it. (Always,
always, always disclose
modifications. Failure
to do so will void
coverage in the event of
a claim.)
-
Agreed Value policies
recognize a classic
car’s appreciation in
value over time.
- The
policy guarantees full
compensation to the
owner in the event of a
loss.
It is impossible to ballpark
a premium level for a
“classic” as they vary
widely per car, condition,
level of maintenance, degree
of security, and method of
storage. It is reasonable to
say, however, that the big
players in this genre of
insurance -- Hagerty,
Grundy, and American
Collectors Insurance -- all
have reputations for fair
coverage at good rates.
Drivers should expect:
- To be
required to have an
additional vehicle for
daily driving.
- To
have a “classic” that
qualifies for the
designation under the
insurer’s definition.
- To be
given an annual mileage
limitation, generally
2,500 miles or less.
When insuring a classic
vehicle, be prepared to
comparison shop for
coverage, to secure and use
an appraisal of the vehicle,
and to provide proof of
proper maintenance and
secure storage. Certainly
adequate, affordable can be
obtained for these cars, but
it does require both time,
research, and documentation
on the part of the owners.
