You’ve finally found it. After months, even years of searching, you’ve discovered the one. Whether it’s a cherry-red 1967 Mustang or a pearl-white 1971 Corvette Stingray, your classic ride is a major investment. So make sure you protect it with classic car insurance. Regular auto insurance simply won’t cover all your bases. Classic car coverage is different in many important ways. Here’s what you need to know.
Classic Car Insurance vs Regular Coverage
How does your standard auto policy value your daily driver? Each year, it’s worth less than it was the year before. But classic cars don’t depreciate. If anything, they appreciate. And this is where traditional insurance falls short.
Standard policies calculate payouts based on actual cash value, which includes depreciation. But if your car has been carefully restored and actually increased in value over the years, actual cash value just won’t cut it.
Bowthorpe & Associate Insurance Producers, Inc. is all too familiar with collectors who lose thousands of dollars because they didn’t know any better. Agreed value coverage is the solution. You and your insurer agree upon your car’s value in advance, using appraisals and market value data to guide you. In the event of a claim, you receive that amount, with no depreciation factored in.
Factors Impacting Premiums
So how do insurance companies come up with that premium in the first place? It’s not magic. Several factors go into the calculation, and being aware of them will help you make better decisions.
Condition of the Vehicle. This is the number one factor. An impeccably maintained car in original condition will cost less to insure than one that’s been worn, modified, or otherwise tinkered with.
On that note, modifications. That extra horsepower, that custom paint job, that aftermarket stereo system you just can’t live without may sound great, but it complicates insurance issues. Heavily modified vehicles may be uninsurable by some companies without specialized appraisals.
But classic car insurance is usually cheaper than regular auto insurance. Less driving means lower premiums. You’re not commuting to work in your prized possession. It’s not getting dinged up every day. Limited use policies, as they’re called, assume your classic will be used for weekend shows, the occasional cruise, and very little else.
Limitations like these result in far lower premiums. Most classic car policies set annual mileage limits between 2,500 and 5,000 miles. As long as you’re under that, you can expect to pay less.
Common Pitfalls to Avoid
We all do it. We buy something and then immediately start thinking of ways to save money. But cheap is rarely the best approach when it comes to classic car insurance. And a mistake collectors often make is underinsuring their rides.
If you bought your car for $30,000, it’s worth $30,000, right? Wrong. Unless it’s an unmolested original with very few miles on the odometer, your investment will have appreciated substantially by the time you drive it off the lot.
That’s why you get professional appraisals. You want a policy that covers the current market value of your car, not what it cost to buy it new. Then get those appraisals again every three to five years.
Market values for classic cars rise and fall based on consumer trends, the economy, and overall collector interest. Get that restoration just right, and your $50,000 car could be worth $70,000 in two years. The economy tank, and the same car might be worth only $40,000. Regular appraisals keep your policy amount from drifting too far out of line.
Policy exclusions are another tripwire for collectors. Don’t just read the fine print, study it.
Most policies specifically exclude racing, competitive events, and some storage situations.
If your car lives outside, for example, and not in a garage, you might find yourself in the middle of a claim only to discover—much to your chagrin—that your insurance won’t cover it. Ask questions. Know exactly what your policy does and does not cover.
Selecting the Best Protection for Your Classic
If you’re a collector, there’s a good chance you already have several cars to insure. It’s tempting to roll your classics into your standard auto policy, but that could mean inadequate coverage.
You want an insurer that specializes in classic vehicles and offers agreed value coverage, spare parts protection, and other endorsements specific to collectible cars. Check out their reputation, look for customer reviews, and research their financial stability.
Document, document, document. Keep records of every modification, every restoration detail, and every appraisal. They will help prove the value of your vehicle and make a claim much easier to process, if necessary.
Classic car clubs are great resources for insurance leads and inside information. If you’re just starting out, consider becoming an active member of one or more of these groups.
Your classic car is a major investment. Protect it like one. Whether it’s a weekend show car or a curated collection, take the time to find the right insurance coverage for your vehicles. Keep the documentation up-to-date, and review your policy regularly. You’ll sleep better at night knowing your car is properly protected.
FREQUENTLY ASKED QUESTIONS
How much does classic car insurance cost?
Typically between $200 and $600 a year. Classic car insurance is much cheaper than standard auto insurance because it assumes you don’t drive your collectible every day. Most policies restrict annual mileage to 2,500-5,000 miles.
How do I know if my car is a classic for insurance purposes?
Classic car status is usually based on the vehicle’s age. Most insurers use a cut off of 20-25 years. Of course, each insurer has its own set of criteria, but your car should be well maintained, unmodified or authentically restored, and primarily used for exhibitions, club activities, or occasional pleasure driving.
Can I use my classic car daily if I have classic car insurance?
Classic car insurance policies are not for daily use vehicles. They have mileage limits and assume the car won’t be driven regularly. If you’re going to use your classic on a daily basis, you’ll need different coverage that allows for much higher mileage and more frequent driving.
Do I need a special garage for classic car insurance?
Most insurers will require that your car be stored in a locked garage when not in use. Specific storage requirements can vary between policies. Keep the vehicle outside or in an unsecured location and you may lose coverage or be denied a policy.