If the old saw that beauty is in the eye of the beholder is true, most insurance companies need glasses. They look at a classic car and write one thing on their little forms — “old.” In insurance lingo “old” is a first cousin to “depreciation.” In order to find companies that understand that classics appreciate in value over time and have intrinsic worth beyond simple functional mechanics, owners who need classic car insurance must deal with specialty firms.
As in most insurance negotiations, factors like miles driven, method of storage, degree of theft protection, and maintenance are central to achieving coverage that is both affordable and comprehensive. That, however, may have different meaning to different owners given their individual circumstances and finances. Some things to consider before talking to the insurance company include:
• Can I bear the cost of insuring my car for its real value?
• Will I incur liability by participating in car club-sponsored events?
• If my car is in the restoration phase, do I need additional coverage while the work is being completed?
• Can I live with a yearly mileage allowance if it means lower premiums?
• Will there be a need in the immediate future to ship my car and if so, will I need additional coverage?
• When my car is in the shop does my policy cover potential theft and damage or is the mechanic responsible?
Simply dealing with a specialty firm and having an insurance strategy in mind is not enough for the classic car owner. An understanding of key industry terms is also essential to making sure the policy you sign addresses your needs and protects your investment.
Stated Value
These policies choose the lesser of two amounts:
– the cost of the necessary repairs.
– the stated value of the car.
There are catches, however, that make what sounds good on the face of things not such an attractive option for classic owners.
• The company sets the premium level based on the stated value, so, the higher the stated value, the higher the payments.
• The company is under no obligation to use the stated value in settling a claim. Instead, they’ll determine an “actual” cash value and pay that.
In the insurance world standard operating procedure is to pay the least amount possible.
Agreed Value
This is what classic owners want in a policy. At the time the papers are signed, both parties agree on a set amount of coverage. This means owners can get a qualified appraisal that represents the worth of their car and any modifications made to it. (Always disclose modifications. Failure to do so voids coverage in the event of a claim.) Additionally, agreed value policies recognize a car’s appreciated value and guarantee full compensation in the event of a loss.
Premium levels for classics will vary according to the condition of the vehicle, how it is maintained, how it is stored, and the degree of security present. The major classic car insurers — Hagerty, Grundy, and American Collectors Insurance — all offer good rates. Terms to expect include:
• A requirement for a second car for daily driving.
• Meeting the company’s definition of a “classic.”
• Annual mileage limits of 2,500 miles or less.
Classic car owners in the market for insurance will be best served by going in armed with an appraisal and proof of proper maintenance and secure storage. With patience and willingness to comparison shop, affordable, comprehensive coverage is readily available.