Everything You Need to Know About Classic Car Insurance

Who hasn’t seen them - ‘57 Stingrays, ‘69 Mustangs, ‘42 Fords - classic cars cruising on a Sunday afternoon. You might have even seen classic car auction coverage on some of the cable networks. Beautiful cars with classic styling, some going for millions, depending on how desirable and rare. Whether you’re an aficionado or a mere admirer, you might have asked at some point: “Who on earth insures those things once they leave the auction floor?”

Well, for more than 50% of classic cars in America, the same auto insurance companies as for any car on the road. But what insiders know is that anybody who is insuring their collector automobile through a standard insurance company - and under a standard insurance policy - is paying a premium. Yes, believe it or not, by insuring these investor’s vehicles with a specialty insurer, specialists in classic car policies, owners are saving a bundle! And they are finding that specialty insurers - like American Modern, Infinity, Hagerty Classic, and Grundy Worldwide Insurance - have fewer restrictions in their policies for classic, collector automobiles, as well as modified custom cars.

How Much Can Hobbyists Save?

It might surprise you to know that these specialty insurance providers can save the classic car collector up to 500% over traditional, nationally-known insurers policies.

Because these specialty insurers know the ins and outs of collector car usage and driving habits, they can safely estimate the risks associated with each vehicle. One specialty insurer, Hagerty Classic Insurance, has gone on the record as estimating their annual premium for a stock classic car valued at $10,000 for “as little as $90 per year.” Extraordinary!

What’s the Catch?

Well, for one thing, custom cars are not daily cars. As a result, many policies written by specialty classic car insurance companies have mileage restrictions. Some require odometer readings be verified and limited to a certain number per year, up to 2,500 for example. And most every company offering classic car insurance programs will not allow vehicles to be used for racing, daily transportation, or the commercial transportation of goods or passengers. Finally, most specialty insurance companies require that drivers be 25 or older, and may even require that a driver be at least 30 years old.

However, insurance companies that specialize in writing policies for classic cars typically offer exceptional claims service, and even offer special group liability discounts for owners of multiple collector cars. Standard insurance companies cannot come close.

How Do They Set the Value for Collector Cars?

It’s not like an insurance company can just pick up Kelly’s Blue Book and arrive at a fair price should a classic, collectible car be involved in an accident, especially if one were totaled. Instead, specialty insurers have arrived at three approaches to establishing the insured value of a collectible vehicle, which can include exotics that are treated like collectibles:

• Actual Cash Value coverage (ACV) - This is the same approach to insuring the standard offering of most major auto manufactures. If a car is totaled in an accident, the policy pays out the depreciated Kelly Blue Book value. The older a car is, the less value it is perceived to have.
• Stated Value coverage - Some insurance companies offer Stated Value policies for custom or classic cars. An improvement over ACV policies, these policies allow the one insuring the collectible car to “state” a value for the vehicle that’s greater than its expected depreciated “book” value. Nonetheless, Stated Value can still depreciate over time, and most policies of this kind allow the insurance company to pay “up to” the “stated” coverage.
• Agreed Value coverage - This is the only approach to collectors or custom car insurance policies that guarantee you’ll get all of the money you invested in your classic automobile should the car ever be totaled. With this kind of coverage there is no depreciation of a car’s value over time. It almost begs the question why any collector would choose anything but an Agreed Value policy!

What About Those Collectors with Standard Insurance?

It might all seem a great big hassle navigating the specialty insurers and their policy restrictions. So, why not just stick with what you know if you’re a collectible vehicle owner? Well, you might have a point there if simplicity is your primary motivator. But there are other considerations. For example:

• Would you like to save many times over on your annual premiums?
• Would you like a “group” discount on multiple vintage cars?
• Does your standard insurance company offer Agreed Value protection?
• Does your standard insurance company understand the nature of collectible cars, which can be significant when repairing a collectible car?

If you can honestly answer these questions and it still points to sticking by tried and true standard auto insurance for a collectible car, well, by all means don’t make the switch. But if better prices, better protection of your investment, better understanding from insurance reps, and better service catches your fancy like a Corvette Split Back, you might look into specialty auto insurance for your own classic car.