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Insuring a Classic Car: Get a Handle on the Basics

There are two gold standards in determining how to insure your classic car: how it will be used and how it will be maintained. By judging those two criterion, you can arrive at an appropriate and affordable level of coverage. Begin by answering some questions.

• Can I afford to insure the car for its actual value? If not, what can I afford and on what do I base that figure?
• If I belong to a car club and participate in events, is there a degree of liability involved? If so, can I afford that liability?
• If my car is undergoing restoration, does it need to be insured while the work is being performed?
• Can I determine an amount of yearly mileage and negotiate with the insurance company on that basis?
• Will the car needed to be shipped at any point and if so, what extra coverage will be needed?
• Where will repairs and maintenance be performed and by whom? Is extra insurance required to guard against theft or damage under those circumstances?

Don’t rule out an insurance company (like Titan Auto Insurance) specializing in classics and collectible cars. These specialty policies may be much more affordable and more appropriate in terms of covering a vehicle that will be driven in a limited fashion and stored under special conditions. Consult with club members for recommendations or conduct online research. Regardless, however, there are some standard requirements routinely attached to classic car policies including:

• The holder of the policy must be the owner of the car and must have a second vehicle for daily driving.
• The insured car must qualify as a “classic” by the company’s definition of that term.
• An annual mileage limitation of 2,500 or less may apply as well as other restrictions on how the vehicle can be used.

All classic owners should understand at least three key insurance terms before going into negotiations for a policy.

• Actual Cash Value: A policy negotiated under these terms will pay at a depreciated "book" value. For older cars, the ACV will be much lower. (You don’t want an ACV policy.)
• Stated Value: A value set by the owner at the time the policy is issued. The problem with a policy negotiated on this basis is that the company has to pay ONLY that value when a claim is filed.
• Agreed Value: This is the only insurance position that will allow the car owner to recoup his complete investment in the event of a total loss to the car.

Don’t think, however, that securing insurance for a classic is a “done deal” based on set standards. Be prepared to negotiate strenuously on the basis of how your classic is used and how it is maintained. No two elements are more crucial in profiling attached risk. Don’t settle for just any policy and do not sign off on any policy until you understand exactly what you are getting. Your goal is to safeguard both your classic car and your pocketbook. To do that, go into the process with a proactive attitude and move on to another company if you don’t get what you want and can afford.

 

 

 

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