If you are a connoisseur of classic cars and have one (or two or three or four) in the garage, you need classic / antique car insurance. A standard auto insurance policy doesn’t provide the type of coverage you need to fully protect your classic car investment.
There are major differences between a standard auto insurance policy and one that is specifically designed for a classic car and having the wrong policy type can be a very expensive mistake.
We thought it might be helpful to run down the differences between the two and give you a general overview of how to properly insure your prized possession.
What is the Definition of a Antique / Classic Car?
The term “classic car” can mean different things to different people but if you ask the experts, it usually means a car that is at least 20 years old. According to the Classic Car Club of America, a car that is between 20 and 40 years old would be considered a classic car while a car that is over 45 years old would be called an antique car.
Exotic cars make up a different category and are not often considered classic cars although they may be insured in the same way that classic are commonly covered. Exotic cars tend to be small batch, hand built, powerful sports cars that come with a pretty hefty price tag.
The classic car market is actually fairly large with Auto Trader Classics estimating that there are about 6 million classic car collectors in the U.S. with another 25 million calling themselves a classic car enthusiast.
Classic Cars / Trucks / Hot Rods and Insurance
Classic cars have their own special needs when it comes to insurance. The majority of classic vehicles spend more time in the garage then they do out on the road, mainly being driven on weekends, at car shows or other special events, they are rarely used as a daily driver. This combined with the fact that these cars tend to be driven very carefully lowers the risk of an accident.
In addition to spending much of their time under a tarp, classic cars also tend to appreciate in value while a normal car will lose 15 percent of its value the moment it leaves the dealer lot. Classic cars need a different type of insurance policy, one that pays out a specific value instead of a current market value, as it can often be hard to put an exact value on a classic car.
Agreed Value vs. Actual Cash Value
One of the major differences between normal car insurance and classic car insurance is how the vehicles are valued and the payout amount if a claim has to be made. Here is a brief overview of the differences:
- Conventional Insurance: The majority of standard auto insurance policies cover your vehicle at actual cash value. This means that if your vehicle is totaled your insurance company will pay out what they determine to be the actual cash value of it as the time of the accident which includes a lot of depreciation.
- Classic Car Insurance: Classic car insurance on the other hand will be insured for an agreed upon value, this is often called a guaranteed value. This value is agreed upon when the policy is written and is most cases is based on collectible car guides such as Old Cars Report Price Guide and an appraisal by a classic car professional.
As an example, if you purchased a Toyota Camry in 2013 and paid $25,000 for but if it is destroyed in an accident 6 years later your insurance company will take depreciation into account and the payout may only be about $14,000. New cars dramatically depreciate over the years and this will impact the insurance payout if you car ends up totaled.
Once the value is agreed upon and the policy is written, if the car is destroyed or stolen the full guaranteed value would be paid out by your insurance company. It should be noted that even if the car has appreciated in value the payout value will remain the guaranteed value stipulated in the policy. If your classic car has appreciated dramatically since first purchasing your policy you should have your policy updated or rewritten to reflect the new value.
Classic Car Insurance Details
Classic car insurance works much like a standard car insurance policy but there can be some very specific differences.
Classic car insurers require that your collectible car is not used as a daily driver and most policies put a maximum annual mileage on the policy. This restriction can vary between insurance companies but in most cases it’s around 7,500 miles per year.
Another restriction that classic car policies come with is that the vehicle most be driven for pleasure only. Participation in a parades, classic car shows or just a pleasure drive are all fully covered but if you start driving your classic car to work or to do the grocery shopping, you may not be covered.
Classic car policies do have many things in common with a standard policy. They come with a 12-month term and offer liability, collision, comprehensive, medical payments as well as uninsured/underinsured motorists coverage. Just like all motor vehicles, state mandated liability insurance requirements apply to classic cars so it is illegal to be out on the road without the proper insurance coverage.
In addition to standard coverages, there are usually optional protections available. Here are just a few:
Roadside Assistance: The big difference here is that your car will be put on a flatbed to eliminate the wear and tear caused by towing it behind a tow truck.
Auto show Medical Reimbursement: If a person sustains an injury at a classic car event that features your vehicle this policy will pay out to cover the liability. As an example if someone trips and falls in your exhibition space, you could be liable and this coverage protects you.
Spare Parts Coverage: If you carry spare parts to a show or even in your garage, this coverage will protect them if they are lost of stolen.
Where Can I Get Classic Car Insurance?
Right here for starters. We can help your find a great classic car policy that fits your needs and budget. Numerous nationwide insurance companies offer classic car coverage. These insurers include Progressive, Farmers, Safeco, State Farm, Esurance and GEICO to name a few.
In addition, there are specialty insurers that deal only with classic cars such as Hagerty, Grundy, American National and J.C. Taylor. One of the best places to start your search is with your existing auto insurance company as you may be able to get a discount for insuring multiple vehicles with the same insurer.
Here are a few tips for insuring your classic car:
Document its Value: You will need to substantiate the value of your vehicle. Take photos and consult industry pricing materials. It never hurts to have the vehicle appraised by a professional. It is extremely important to get this right so you are properly reimbursed by your insurer if something happens to your collectible car. If you are unhappy with the value your insurer places on your vehicle, keep shopping.
Read the Policy: Always read your policy in full and ask questions about anything you don’t understand.
Review Restrictions: These policies do come with restrictions related to mileage and when you may able to drive the car. Review the list of restrictions and make sure you can comply with all of them because if you don’t you may not be covered in the event you have to make a claim.
Your Favorite Repair Shop: You may have a trusted mechanic or shop that works on your vehicle, make sure that your insurer will let you choose the repair shop of your choice.
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