Many people love that recognizable “new car smell”—there are even air fresheners catering to the lovers of the leathery, fresh scent. However, there are some car enthusiasts who would prefer an air freshener with an ‘old car smell.’
Unfortunately, some enthusiasts that have antique cars or collector cars fail to get the proper auto insurance. Although putting your classic vehicle on your existing car insurance policy may seem like the logical thing to do, if the unthinkable was to happen, you may only receive a very small portion of what your car is worth. Most collectors of antique cars look at their cars like investments, so it’s only logical that investment is protected adequately. Of course, insurance for antique cars may not equate to cheap car insurance, it certainly means more coverage than a standard auto policy offers.
Typically cars depreciate in value, and many are familiar with the saying that a car has depreciated as soon as it’s driven off the car lot. With collector cars though, they often appreciate in value, and regular auto policies are not created for this.
For example, assume you bought a car in 1975 for $2,000. You have the car appraised today and learn it’s worth $16K. You also find out that it will sell at some car shows for $20K. The car is insured on your regular auto insurance policy. Then an accident happens, totaling the vehicle, so you make a claim. You would have to consider yourself lucky if your insurer paid you even $2K for it.
Another large misconception when it comes to collector and antique cars is that if you have it parked in your garage and your house burns down, it will be covered under your personal property coverage. In actuality, it wouldn't be covered, but policies for antique/collector cars would cover this.
When you begin shopping for insurance for your collector car, check the policy details to see if everything is insured for what you feel is adequate. One thing you really need to pay attention to is the car's listed value and what kind of coverage it’s insured with– cash value, stated value, or agreed value. Although the definitions of these terms are usually the same across the board, you should still check to see how your insurer defines each. Here is how these terms are normally defined:
Actual Cash Value: This is how coverage works with regular auto insurance. It means you will receive the cost to replace it less the amount of depreciation, which ultimately means if you total your car, the most you can hope to receive is what you paid for the vehicle to begin with. Of course, you’ll have to choose a comprehensive and collision deductible as well. Unfortunately, you may not even get that much for it since insurance policies factor in depreciation. If you haven’t proven the car is an ‘exception’ to depreciation, it’s not going to be treated any differently than any other car.
Stated Value: This means the insurance company will agree to pay the value you've stated it should be insured for and have shown that the car is worth that amount. This sounds easy and like the best option, but most insurance companies won't agree to the full stated value. Generally this type of coverage carries a $1,000 deductible.
Agreed Value: This is the most common kind of policy for an antique or collector car. It refers to the value both you and your insurer agree to, and normally there isn’t a deductible for this type of coverage.
Many insurers offering coverage for antique or collector cars have different stipulations as to who they'll write a policy for. The rating factors used for standard auto policies are considered on these policies as well, but other factors are weighed more heavily with antique car insurance. The following guidelines are helpful in getting cheap insurance premiums and also maintaining coverage eligibility:
- Maintain a decent driving record (especially important for antique car insurance since the car’s value is higher, meaning the insurer wants to know that valuable car is being driven by a safe driver so they don’t have to pay out a lot of money in the event of a loss.)
- Have at least ten years of driving history
- No teenage drivers or those with a poor history should be placed on the policy
- The vehicle should be insured in a safe place, preferably in a locked area and parked off-street
- Often you must furnish proof that you drive another car for daily transportation. Also, some policies will put a limitation on how many miles you can put on the insured car each month. Normally this is around 250 miles or less.
Just like any other insurance policy, make sure the coverage is the right amount that you need. Get an assessment or appraisal done regularly to ensure adequate coverage. You should also consider how often and how far you plan on driving the car. If you only drive it for a couple times a year or back and forth to an occasional parade or show, then you can ask for a lower mileage limit and this will usually help you get a cheaper premium.
If you're restoring the vehicle, make adjustments to your policy as you complete restorations to ensure the coverage amount reflects these improvements. Once you’ve completed restoration, have the car re-appraised and share the appraisal with your insurer to update the car’s value depending on the kind of policy you’ve purchased.
Insuring a collector or antique car is very similar to insuring your home, because they will appreciate in value unlike any other auto. It’s rare for a car to increase in value, so if you own one that does, it’s definitely worth insuring properly. Although antique car insurance may not insure the sentimental value of your ‘baby,’ it will at least insure it for a lot more than a regular auto policy.
-Desiree Baughman, InsuranceQuotes.org, @DesireeDB
Facebook Comments