Understanding insurance for your classic car is important before you bind your policy so that you get the coverage you want or need before any accidents happen. Far to often damage occurs and the insurance policy is not what the owner thought ending frustration and lost money or extra costs.
Owning a classic car or truck is much more than a hobby. These vintage vehicles are investments that need to be protected. They need to be maintained and kept in a garage or other secure storage when not being driven. They also need to right insurance policy to ensure they are fully covered in case of an accident or theft. There is coverage for classic cars offered by both large national insurance providers and by smaller, specialized insurers alike.
It is important to understand what goes into a classic car insurance policy:
Agreed Value vs Stated Value
I will lead with this as it is the most important part of the classic car insurance policy, and it is often the most misunderstood.
Stated Value is coverage that reflects an amount that is “stated” at the onset of the policy. You tell your insurer what your car is worth (with proper documentation), and it is insured for that amount. The caveat here, however, is that the insurance company can choose to pay you either the Stated Value or the Actual Cash Value, whichever is less.
Alternatively, Agreed Value, coverage primarily offered by specialty insurers, is based on the proven value of your car as determined by you and the insurance company, according to appraisals, photos, or other relevant documentation. With Agreed Value coverage, the insurance company will guarantee that they will pay this agreed-upon value in the event of a covered total loss.
If you own a classic or collector car that is maintaining or increasing in value, Agreed Value is the best option to consider, or you risk losing out significantly if you have an accident. It is important to note that most standard insurance companies do not typically offer Agreed Value unless they partner with a specialty provider.
Determine If You Own a Vintage or Classic Vehicle
There are no clear-cut definitions within the insurance industry that states what a makes a vehicle a classic. Generally speaking, a vehicle is considered a classic if it is at least 20 years, is restored or in good working condition, and has a value that is larger than the average value of the cars made by the same manufacturer and model year.
Classic Cars Have Restrictions
You are not going to be able to use your classic car or truck as a daily driver. Insurance companies will impose some restrictions on how owners can use their classic or vintage vehicles. In most cases, classic car owners are allowed to use their vehicles at rallies, parades, car shows, or weddings. The insurer may also require proof of another vehicle used as a daily driver.
Determine The Value of The Vehicle
The vehicle owner and the insurer must agree upon the value of the classic car or truck. Determining the value will often require the professional services of a third-party appraiser. You want to be sure that the vehicle is fully covered should something catastrophic happen to it. The insurance company will only cover the agreed upon value.
The Costs of The Insurance Policy
With many of the insurance restrictions imposed on classic cars, the cost of the policy will always be lower than the cost to insure a daily driver. After all, classic cars are rarely driven, are kept in the garage most of the time, and are well maintained.
Discounts
Popular discounts among classic car collectors include multi-car policy discount, clean driving record discount, and anti-theft devices discount
Exclusive Classic Cars Options
Specialized insurers can offer special options like specialized roadside assistance, no attendance required, and spare parts coverage.
There are several conditions to be met before a policy can be issued. These include:
- Mileage: There are mileage restrictions that vary according to each state. Limits for annual mileage are about 5,000 to 7,000 miles, but some insurance companies limit mileage to less than that.
- Age Of the Car: Usually, 20 years old or older.
- Driving Record: Insurers will often look as far back as 10 years when checking the driver’s record. Even one at-fault accident may prevent you from getting insured for a classic car.
- Storage: The car must be garaged or placed in a storage facility.
- Usage Agreement: You will be asked to agree not to race the classic car or expose it to any other types of potential peril.
- Condition Of the Car: If the car is not in good condition or has been in an accident, insurers will be hesitant to insure you.
Finally
The key to any insurance coverage is to understand the type of coverage you are looking for along with the value of coverage you want for your classic car before starting your comparison shopping.
