Insuring Classic/Collector Cars

Wednesday, August 10, 2016

So you’ve taken your new treasure home to show the family who quickly reminds you to call your insurance agent and add it to your auto policy.

Is that what you really want to do? Adding it to your personal auto policy is probably not the best choice. If you do that and your new pride and joy is involved in a collision, the repairs will only be done to make the vehicle functional and presentable. If it gets totaled, you will only be paid the value based on a “book” price. Not only that, but classic cars do not have the safety features the cars of today have such as anti-lock brakes, air bags, shoulder belts, electronic stability control, etc., which often makes them too expensive or even impossible to insure with a standard auto policy. By their very nature, collectible cars generally increase in value over time. The cars we use in our everyday lives usually lose value over time.

What should you do? Instead, have a conversation with your agent about what policy would be the best for “your baby.” There are several coverage options available. 

Classic auto insurance usually covers your collectible vehicle for an agreed amount – a value the car is worth based on respected collectible car valuation guides.  A professional appraisal may be required to substantiate the value of the car.

Collectible automobile insurance policies are relatively similar. However, the way carriers classify different types of collectible vehicles can vary from insurer to insurer. Here is a general list of what most insurers use:

• Classic/Collectible Car: Defined by many companies as being 19 to 24 years old, restored, in good working condition, and greater than the average value of other autos of the same make & model year.
• Antique Car: Defined by many companies as being at least 25 years old and in good working original or original restored condition.
• Modified Car: Defined by many companies as being significantly altered in its engine, body, chassis or interior from its original condition, which can negatively or positively change the value.
• Kit Cars & Replicas: Defined as representation automobiles that are at least 24 years old with separate manufactured components, or that represent the assembled reproductions of any motor vehicle at least 25 years old.

Remember these are guidelines. You will need to check with your agent as to how the company they represent would define your particular vehicle.

Insurance for a collectible automobile works much like traditional automobile insurance. The policy typically has a term of 12 months and includes coverage for Liability, Collision, Comprehensive, Personal Injury Protection and Uninsured/Underinsured Motorists. State-mandated liability coverages extend to collectible cars as well as regular private-passenger vehicles. In terms of optional coverage, apart from the standard coverage such as collision and comprehensive, there are also some options unique to classic cars. You may need to start with one type of coverage then upgrade to another. For example, when your car is not being driven while it is being restored you may elect to carry Comprehensive coverage only or Liability and Comprehensive if required by the insurer, then add Collision and other essential coverage when she hits the road.

Examples of options offered by most classic car insurers are: 

• Roadside Assistance: Including towing only with a flatbed tow truck to prevent wear and tear while transporting to a repair shop or back home.
• Traveling Coverage: Which can reimburse for food, lodging, a rental vehicle, and personal items if your vehicle breaks down
• Auto Show Medical Reimbursement: In case someone sustains an injury at an exhibit or event featuring your car. For example, if someone slips and falls in your exhibition space, this optional coverage would protect you.
• No Attendance Required: Which provides coverage while you are away from your vehicle as it is being displayed at a car show. The vehicle does not need to be in your care, custody, or control in order for coverage to apply. For example, if you let a dealership utilize your vehicle in an event, you would be covered.
• Coverage for spare parts: If you have backup parts on hand, such as a water pump, this add-on would provide coverage for these parts at the agreed value if they were stolen or destroyed.

There are other qualification criteria depending which insurer you use.  Your agent can be your guide here.