Insuring a classic vehicle
Image: dave_7, 2011
Whether you own a 1965 Mustang that's a work in progress or a priceless 1930s-era Pierce-Arrow, having classic car insurance is perhaps the best investment you can make. The last thing you want is to lose your investment in the event of a crash, natural disaster or any other event that could leave your classic car a total loss. When it comes to high value collectibles, it pays to have insurance that is dedicated to covering expensive and priceless classics.
Although the idea of insuring your classic car has been around for decades, less than half of the classic cars that are on the road today are covered under this insurance. Many people simply add their classic car onto their existing, ordinary auto insurance policy. Most people are unaware of the benefits of covering their vehicle under a classic car insurance policy.
Unlike ordinary auto insurance, classic car insurance requires several stipulations to be met before creating a new policy. The stipulations govern how the car can be used while it's covered by the classic car insurance policy. In most cases:
• The car has to be a certain age or older to qualify for coverage.
• The car's primary owner/driver needs to be a certain age or older.
• Yearly mileage is limited to 2,500 miles or less.
• The car can't be driven for commercial use.
• The car must be driven only to car shows, exhibitions, etc.
• The car must be kept in a secure enclosure.
• Drivers should have as few traffic violations as possible.
After meeting the above stipulations, classic car owners should contact a reputable insurance agency that specializes in insuring classic cars either directly (by phone or in person) or through their online website. At this point, all you have to do is follow the application process and wait for an agent to give their approval for the policy in question. Once you receive your insurance documents and confirmation of your policy, your classic car will be covered by your insurance provider.
The average auto insurance policy pays out a depreciated book amount, or "actual cash value" (ACV), in the event of a claim. This book amount can be considerably less than what the vehicle is actually worth, especially a classic car whose value has appreciated over the years. If you own a classic car that is worth hundreds of thousands or even millions of dollars, you can easily see the problem of getting only a fraction of your car's value.
Some insurance policies allow classic car owners to declare a "stated value" for their collectibles. The stated value actually corresponds to the amount of coverage you can afford and not the actual value of the vehicle itself. Therefore, the stated value can be far less than the actual value of your classic car. Although the stated value for the vehicle can be greater than the depreciated book amount, you still might not be able to get the full value of your vehicle in the event of a total loss. In addition, loopholes can allow your insurance provider to default back to ACV in certain cases.
One major benefit to having a classic car insurance policy is the ability to have "agreed value" coverage. The agreed value of the vehicle is discussed and set by the owner and the agent before the policy is issued. If the vehicle is declared a total loss, the insurance company guarantees to pay this agreed upon value, without any exceptions.
The average yearly premium for a classic car insurance policy depends on the agreed value of the vehicle and the driver's own risk factors, among many other variables. Most classic car owners should expect to pay somewhere around the $1,000 mark annually for a typical classic car insurance policy, although many variables can either increase or decrease that premium. In-depth research, available at ClassicCar.com and other sources, is recommended with regard to all aspects of classic car insurance policies.