Specialized Insurance is Required for Collector and Classic Cars
Coverage is usually based on an agreed upon value of the car.
Vintage cars are like fine wine: increasing in value with age. If you own an antique, classic or collector car, you want to be certain you have enough insurance to protect it — and that requires specialized car insurance.
When a car is totaled, a standard car insurance policy cuts you a check for the car's actual cash value (ACV), which takes into account its depreciation. Cars are worth less every year. Antique or classic cars, however, not only hold their value but also increase in value. So you need to find a car insurance policy that protects the full value of your car. You need an insurance policy that offers "agreed value." That means you and your insurance company predetermine the dollar value of your vintage car and, in the event of a total loss, you will be paid that exact amount.
How do you determine the value of your car?
You can hire an appraiser, but most classic car insurance companies don't think it's necessary. If you have a stock original vehicle (one to which you haven't done any work or added anything), there are many resource guides and pricing books, such as the Old Cars Price Guide or the NADA Guides that will give you an accurate estimate of your car's value. If you've made improvements or additions to the car that you believe increase its value, you need to hire an appraiser to support your claim.
If you have a newly restored vehicle or a street rod then price guides probably won't be helpful. When restoring cars or building a street rod you should keep detailed lists of the work performed and receipts for all parts and labor. Some insurers will require appraisals at the owner's expense to establish the agreed value, while others may not. The better insurance companies will rely on your opinion to help determine the proper insured value of your collector car.
If you buy a car insurance policy that outlines an automatic value appreciation, you won't have to review your policy as often. American Collectors Insurance, for example, offers what it calls "inflation guard," which automatically increases the vehicle's value by 2 percent each quarter, up to 8 percent each year, at no extra cost. If, however, your policy doesn't have automatic increases, you should review your policy and your car's value on an annual basis to be sure you have enough coverage.
Qualifications
Both you and your car will have to meet certain qualifications to buy classic car insurance. Perhaps most important of all is that you should have a clean driving record with no more than one or two minor violations.
You'll also have to show that all the drivers in your household have access to another vehicle for daily driving needs. Most carriers require clients to own and insure "daily drive" vehicles and will only write policies on a 'pleasure only' basis." Vintage car insurers also restrict the number of miles you can drive each year. In general, limits usually range from 2500 to 5000 miles depending on a given carriers guidelines.
In addition, many insurers will require the principal owner and driver to have a minimum of five years' driving experience. American Collectors and Classic Collectors require drivers to have at least 10 years of driving experience and the insuree to be at least 25 years old.
Most insurers will also require you to store your prized vehicle in a locked garage when it's not in use. Some companies may require a security system and even a sprinkler system. You also won't be allowed to use the car for things like racing or commercial-transport purposes.
While the standard used to be that a car had to be 25 years or older to be considered for vintage car insurance, the lines have blurred as car collecting has increased in popularity. A car 25 years or older is now considered a vintage car, but cars that are 15 years or older can be considered "modern classics" and still qualify, according to Classic Collectors Insurance. New but extremely rare cars may also qualify for this special coverage. You'll need to check with the insurer on a case-by-case basis to see if your car qualifies.
Classic car insurance is much less expensive than standard car insurance because of the restrictions. The liability portion of your vintage auto policy may cost less than $100 per year. That's because your insurer knows you won't be driving the car very much and, when you do, you'll be driving it very carefully.
The physical-damage portion of your policy (the part that covers theft, vandalism and fire losses) will run you a bit more: about 1 percent of the total value of the car. So if you have a classic car that's worth $100,000, you'll pay about $1,000 for comprehensive and collision coverage. Obviously, pricing will vary depending on the vehicle, where you live, how you garage your car and how often you drive it. For example, a 40-year-old California resident with a good driving record who owns a '67 Convertible Sting Ray (valued at $100,000) and plans to drive it under 2,500 miles a year could pay a roughly $1,500 per year. At the same time, the average premium for a '65 Ford Mustang (valued at $40,000), for the same driver, is around $1100 a year.
Some companies offer additional coverages specific to classic cars, such as "restoration coverage" which increases the value of the car while an active restoration project progresses, "auto show medical reimbursement" that pays out if you're injured at an auto show or other car function, and automatic coverage for new classic cars you add to your collection.
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