What classic car insurance covers – and what it doesn't – fiod quesquers

What classic car insurance covers – and what it doesn't

Classic car insurance, also known as collector's coverage, is basically insurance for vehicles that spend a lot of time in the garage.

Do you have a cherry Cadillac convertible from the 1950s that you take to car shows on the weekends? Do you own an antique tractor or exotic sports car for pleasure? Insurer Hagerty recently released a study showing that interest in owning classic cars is growing significantly — especially among Gen Z.

Classic car insurance, one of many specialist types of car insurance, is what you need to protect your investment.

Classic car insurance policies recognize the intangible assets that make older or collector vehicles valuable – usually much more valuable than the day they rolled off the showroom floor. However, to keep insurance affordable, classic car insurance provides less coverage than standard car insurance. For example, it will not cover the car if it is used for regular transport or is not properly stored.

This means collector car insurance is best for valuable cars that are rarely driven.

According to the Insurance Information Institute (III), there is no single definition of a classic, collector or antique car. “If a car's value exceeds its original selling price, then it can be considered a collector's item and a candidate for specialist classic car insurance,” says III. This may include:

  • Antique vehicles and vintage cars over 25 years old

  • Hot Rods, Muscle Cars and Modified Vehicles

  • Exotic and luxury cars

  • Vintage military vehicles, antique tractors and classic trucks

  • Classic motorcycles

  • Some classic car replicas

Some insurers set mileage caps with options of 2,500, 5,000 or 7,500 annual miles, and almost all limit use to enthusiast meetings and shows, touring and occasional pleasure driving, which has the same effect.

Classic car insurance is similar to regular car insurance in that it offers coverage for property damage and bodily injury liability up to certain amounts and with agreed deductibles. But the similarities pretty much end there.

With classic car insurance, your car must qualify as a collector's item and be treated as such, meaning there are restrictions on where it can be driven and stored. For example, you may need to have a garage.

Also, while regular auto insurance covers the “actual cash value” of the car, which factors in the depreciation of that make, model, and year, classic auto insurance policies use an “agreed value,” which takes into account the estimated price that your particular car would was sold at a collector's auction. Classic car insurance can also help pay for hard-to-find spares and parts and provide roadside assistance.

No. Any car used for regular errands and commuting requires standard car insurance. Classic car insurance excludes daily driving and usually limits where or how much you can drive the car. Some insurers even require proof that you own another car for daily use.

Classic car insurance coverage is designed to offer affordable insurance for vehicles that would be extremely expensive to replace. Because daily driving increases the risk of an accident, insurers are able to reduce the cost of classic car insurance by limiting usage. In fact, Hagerty.com, a company that specializes in classic car insurance, cites daily use as the central definition of a classic vehicle, saying, “if it's not a vehicle you drive for your daily transportation, Hagerty can protect it. “

Some insurers set mileage caps with options of 2,500, 5,000 or 7,500 annual miles, and almost all limit use to enthusiast meetings and shows, touring and occasional pleasure driving, which has the same effect.

Insurers generally only sell vintage car policies to experienced drivers with good driving records. This further reduces the risk of an accident and a costly claim. It is common for the named insured to be at least 25 years old, with no moving violations in the past three or five years. Policies also usually require the owner, as well as all licensed drivers in the household, to have a vehicle for regular use with standard insurance.

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Classic car insurance is usually quite a bit cheaper than standard car insurance. By limiting who and how much can drive the car, insurers are able to dramatically reduce the risk of an accident.

Hagerty says premiums for classic cars average 34% less than premiums for everyday drivers. American Collectors Insurance advertises its classic policies as up to 40% less than standard policies. Bailey Insurance says its collector car policies typically run between $200 and $600 a year unless the car is very valuable, compared to more than $1,000 a year for standard auto insurance.

The stated value is what is used in standard insurance policies. If your car is a total loss, the insurer pays the actual cash value of the car at the time of totaling. Actual or stated value does not account for collector value, and older cars tend to be worth less and less with each passing year.

Classic cars are usually insured at 'agreed value', which is the amount you and the insurer agree the car would be worth at auction. If you make improvements to the car, you can negotiate a new agreed value.

Most car insurance companies offer classic car policies for some types of classic cars and you may be able to get a multi-line discount if you use your existing insurer. But insurance companies that specialize in collector cars are more likely to cover your unique car and offer a wider range of policy options. These include Hagerty, American Collectors Insurance, American Modern Insurance Group and Grundy Insurance.

Just as you should when shopping for any auto policy, look for multiple auto insurance quotes for this type of coverage. A classic car policy should be affordable while giving you peace of mind that your unique investment is protected.

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