The Garage: Classic Car Talk
What is Classic Car Insurance and How Does It Work?
If you own an antique or classic car, you need classic car insurance policy. Vintage cars are an investment and have unique insurance needs. You need the right insurance to repair or replace the car in the event of damage. Standard auto insurance rarely covers the full value of a collector vehicle (classic cars, classic trucks, hot rods, etc.). Specifically, you need collectors car insurance.
How Does Classic Insurance Differ?
Standard car insurance coverage only covers the "Actual Cash Value" (ACV) of the vehicle. You will only receive the original cost minus the amount of depreciation of your current vehicle. Since the ACV of your vehicle depreciates yearly; insurance policies will not pay the full price of your vehicle, even if that vehicle is totaled, thanks to depreciation.
Car insurance for vintage cars, however, operates under a different assumption of value. Rather than depreciating the vehicle on a fixed schedule and calling that its value, the actual market value of the vehicle is considered with respect to paying for your loss. You and the insurer (an agency or an independent agent), agree on a set value for your antique car, which matches its true current market value. If the vehicle is totaled, you receive the agreed value. The value paid out is calculated using classic car price guides, the rarity of the vehicle, auction results and other sources. Some insurers require an appraisal at your expense, while others do not. You should also inquire into their policy on auto claims. Are you able to check your claim status? What’s their policy on the original replacement of parts? Do you have access to monthly claim overviews? These are just a few questions you should be asking before choosing an insurer.
Classic auto insurance should be re-evaluated periodically. Usually, this is done every year at policy renewal, but in special cases where values are increasing sharply, you may want to do it every few months. Collector cars are likely to increase in value. You will want to work with the insurer to raise the value of your policy if you believe it has increased (or in leaner years, to lower the value if it has decreased to save yourself some insurance premium dollars).
Does Your Car Qualify?
Insurers have various rules that govern what is and is not considered an eligible car. Vehicles must typically meet the following guidelines to be eligible for classic auto insurance:
- It must be a vehicle that, by its nature, is widely considered to be a specialized collectible
- It cannot be your primary vehicle, and cannot be used as a daily driver for errands, commuting, etc.
- There may be a maximum number of miles you can drive the vehicle each year (this varies by state, but is generally around 7,500 miles).
All classic car insurance policies have additional underwriting rules. Common across them all: Drivers must have a good driving record. Also universal: you must park your classic car in a garage or other shelter to protect it from the elements or prying eyes. If your car has been damaged or is in poor condition, it is likely not eligible for insurance.
How Does It Work?
Classic car insurance coverage works in a very similar way to standard insurance coverage, but there are some differences. Each policy is usually valid for 12 months. The policy covers physical damage from collision or other-than-collision causes, liability, uninsured motorists, and medical payments. There are a number of small additions typically given away with such policies as well. These include roadside assistance, coverage for spare parts, travel reimbursement, which pays if your car breaks down and you need to stay in a hotel while the vehicle is being fixed. If your vehicle is damaged but not a total loss, since your classic insurer is accustomed to the much more involved repair process associated with a rare classic or exotic, you will be expected to take the vehicle to the shop of your own choosing for repair, and the insurance company will be much more understanding about the costs associated with bringing the car back to its former original glory. Make sure to contact your insurance company for an insurance quote to fully understand your coverage options. Classic car insurance quotes are vital so that you know exactly what is and isn’t covered.
Protect Your Investment
If you have a classic car, make certain you have the correct insurance for it. Some of the small perks, such as roadside assistance, can mean a lot when you’re in a pinch. You’ll need to work with an insurance agency that has the right type of insurance products that work with classic vehicles. If you don't and the vehicle is damaged, you may find that your insurance doesn't cover what you have invested (including costs related to car restoration). Remember to grab a car insurance quote before working with any agent or individual.