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Choosing Classic Car Insurance

Now that you've picked out or picked up your baby it's time to insure it, even if you've dragged home a bucket of bolts. Insuring a classic car is not like insuring your daily driver. It's a bit more complex in terms of dealing with car values, location where it's held, appraisals, and planned driving mileage.

Now, normal auto insurance is designed to protect others against you should you cause an accident. Or put into other words offset your liability in the case of an accident. Depending on the amount of covereage you buy you can always additionally cover yourself against uninsured and underinsured motorists, as well as a bevy of other services. The key to all of this is that insurers use an amortized value of your car, or Actual Cash Value (ACV), in the event that an accident is sufficient enough to damage or total the vehicle. This amortization works fairly well for modern cars, but is terrible for classic cars. So, your Chevy Bel Air that might sell for $50,000 is put against an amortization schedule and the insurer, rather than showing up with a check for $50K, gives you a check for $2,000. Not a good day.

This is where the classic car insurance market comes into play. This secondary insurance market has come into being because classic collectors want appropriate insurance for their cars. Insurance that reflects the real value of the vehicle, and also reflects it's collector nature. Insurance companies have determined that collector car insurance is a good thing to sell, so now we have a market. In fact, collector car insurance, depending on your needs, can be ridiculously cheap! Why? Well, it's a pretty safe bet that you're not going go out and do stupid things with your car, that you'll take great care of it, and will shy away from any driving where you could possibly get into an accident. And, you know what, they're right! In the collector car insurance market there are two primary types of insurance: Agreed Value and Stated Value.

Stated Value

In a Stated Value insurance policy, a dollar figure greater than an ACV schedule can be put upon a vehicle. So, Say you have a TR6 with an ACV of $1,000. In a Stated Value insurance policy you can get insured for the normal sale value of the vehicle: $24,000. So, should you have an accident, the insurer has already agreed to pay out $24,000 on the car if it's totalled, or some portion of this to get it repaired. This is a good thing. Now, there are some possible drawbacks to this. Let's say it's a big year for TR6's, and from January to December the price for a nicely sorted one goes from $24,000 to $50,000. In December some idiot rear ends your car and totals it. You get a check for $25,000, but then immediately realize that it's impossible to buy another one for that price. Now, is this likely to happen? Probably not, but you do need to be aware of this, and I would recommend you annually review prices for your vehicle when you renew your insurance.

Agreed Value

Agreed Value insurance is the "Cadillac" of the collector car insurance market. In simplest terms you come up with a value for your car, and find an insurer that will agree to pay it, and then pay the associated premiums on the insurance. While, it gives you the ability to state any value on your car, it also has some drawbacks. Generally speaking, the greater the amound insured, the greater the cost of the premium. Also, many insurers will look at your askance should you take in your $24,000 TR6 and ask for a million dollars in coverage.

Collector car insurance "rules"

Obtaining collector car insurance for your baby generally means meeting a higher set of criteria than you would if you were insuring for basic Actual Cash Value. Because the premiums are inexpensive (in general) the insurance firms want to make sure that they are not taking any unnecessary risks on insuring your car. Here's a basic list of the types of things most classic car insurers require. It's not exhaustive, and it can vary from insurer to insurer. When looking at prospective insurers, get their list.

  • You have a modern (10 years old or less) daily driver for primary transportation.
  • Your classic car is garaged, or protected in an approved storage means.
  • You have an annual mileage limit (generally 2,000 or 2,500 miles)
  • You may only use it for specific reasons (e.g. driving to meets, rallys, car shows, etc.)
  • Age or experience in driving (e.g. Have been insured as a driver for 10 years).
  • You have a squeaky clean driving record.
  • You have an alarm system for the car.

Now, aside from these requirements it's also likely that the insurer may send someone out to look at your car, require you to send in photos of your car, and possibly have the car appraised by an independent classic car appraiser (which is never a bad thing anyways).

But what if I actually want to drive my car?!

The biggest issue I have with most traditional classic car insurance policies is they hamstring you in terms of actually enjoying your car! In Phoenix you can amass 2,000 to 2,500 miles in a heartbeat, and then you're stuck waiting for your policy to renew before you can drive the car again. Heck, the normal driver in Arizona puts an average of 20,000 miles on their daily driver annually. So, what options are available to the rest of us?

First, talk to your collector car insurance companies. While not advertised as heavily, there are alternate policies, mileage limits and driving rules available. This will boost your premiums, but I'd rather pay a little more and enjoy the car, rather than go sit in it, in the garage, because I'm not allowed to drive it (or even naughtier, sit there considering removing the speedometer cable as no cable = no odometer changes).

Second, talk to your regular auto insurer. While this won't work with most of the newer firms like Geico or Progressive, more established insurance companies like Allstate and State Farm also offer Stated Value or Agreed Value policies. As they insure a much greater range of vehicles as well as other things such as houses, boats, etc, they are able to offer a lot more range in the types of policies they underwrite. Again, you will pay more for the insurance policy, but you will be able to drive your car, and that's what's important!

So what do I buy for insurance?

If you've got a sorted driver, and you only intend to do things like drive to club meets, car shows and similar events, the answer is classic car insurance. If you are comfortable with a Stated Value, go with that as it will be a cheaper policy than Agreed Value. If not, then choose Agreed Value.

If you've got a project that you're going to be working on and not driving, get classic car insurance. A number of these insurers are used to taking care of coverage for vehicles "in process" and will allow you to alter the value of the car as it's worked on. Some will even cover your spare parts for an additional fee. Contrary to popular belief, your homeowner insurance, 99% of the time, will not cover a project car held in the garage. These policies are written assuming any cars have their own coverage. So, get it insured, regardless of it's state!

If your classic will be a daily driver and you're living on the cheap, you'll have to accept traditional Actual Cash Value coverage. Keep in mind that if you're in an accident, you'll get little to nothing for the car. If your pockets are deep enough, look for Stated Value or Agreed Value plans that do not have the mileage limitations and such. If you're going down this route, going with an insurer for all insurance (e.g. House, Car, Boat, etc, etc) should help to drop costs overall as they offer discounts for multiple cars, and whole insurance packages.

Customer Service from Insurers

This critical aspect of car insurance is often overlooked when shopping for a car. In the event of the unthinkable, you have an accident with your classic car. Customer Service from insurers can vary dramatically! When shopping for your insurance also make sure you know how their clams processes work and then talk to others who have had a claim with their company.

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Contents copyright 2008, 2009 - Jody F. Kerr

All references to They Might Be Giants are fan references only. John & John I hope you don't mind! And if you're ever in Phoenix stop by for a visit!

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