How to Insure Your Classic Collector Car

Why and How to Insure Your Classic Collector Car

By

David P. Cunningham Editor/Publisher

Pontiac-Muscle-Car-Roundup.com

Why insure your classic collector car with a specialty insurer? 
Virtually all vehicles driven upon public roads must be appropriately
insured.  This is not only good personal policy but also public policy
reinforced by legislation and regulations in virtually all states. 
Besides being mandated by legislation, anyone who drives a classic
collector car in the public highways has an obligation to himself and
to others who would care to carry appropriate types and amounts
of insurance.  There are extraordinary risks associated with being
liable for accidents or collisions with others.  And, from a purely
self-interested standpoint we need to protect the value of the
assets we drive which are constantly increasing in value.  Without
appropriate insurance, it's difficult to afford to repair damage from
an accident or collision.  Further, there's no way to put a value upon
the peace of mind that quality insurance provides.

What is the definition of a classic collector car?

Most states put forth a time-based definition.  One fairly typical legal
definition is that used by Pennsylvania for the purpose off registering
“antique" motor vehicles.  In Pennsylvania an antique motor vehicle is
a “motor vehicle but not a reproduction thereof, manufactured at least
15 years prior to the current year and which has been maintained in or
restored to a condition which is substantially in conformity with
manufacturer specifications and appearance".  Obviously, however,
the definition varies from state to state.  And insurers have their own
definitions and limitations that range in age from 15 to 25 years prior
to the current year and specify condition as well.  Likewise each car
club tends to have their own criteria to define what they consider to
be a classic car.

How does classic car insurance different from regular car insurance?  

Classic collector car insurance differs from regular car insurance in
many significant ways.  We have developed the following lists to
illustrate most of the more significant differences.

  Regular car insurance:

·    Basically covers any condition vehicle that passes state
    requirements for safety, pollution control and drivability.
    
·    Mainly provided by large non-specialized insurers through
    on-line or local agents.
    
·    Usually requires a significant deductible to moderate the
     cost of the insurance.
      
·    Typically there are no annual “distance driven” limits.
 
·    Typically there are no limits as to where the vehicle may be
     parked      and no requirement that the vehicle be parked in
     a locked enclosure.
     
·    Many fewer driver restrictions are imposed.
 
·    Usually required for all of a household’s licensed drivers and vehicles
    before an insurer will provide collector car insurance.

Classic collector car insurance
 
·    Typically insured collector vehicles are insured for agreed or
     actual cash value of the vehicle.
    
·    Typically, classic collector car insurance is available only to those
     who have regular insurance for each licensed driver in a household.
     
·    Typically, each licensed driver and a household must have a
     regular insured vehicle available to him or her.
     
·    Some insurers require that all licensed drivers in an insured
    household have an excellent driving record.
     
·    Most insurers require that a collector or antique vehicle be
    kept in a locked garage.
     
·    Annual driving distances are limited to a few thousand miles
    (3000-5000 miles is typical).
     
·    Drivers are highly restricted in that they must be experienced
    with driving (typically at least 10 years) and have a very
    limited infraction history, if any.
     
·    Only collector, classic or antique vehicles in good or better
     condition can be insured.
      
·    Vehicles can usually be driven for appearance or pleasure
     only and not ordinary use -- -- no daily driving
    
·    Typically the insurers are smaller, specialty companies.
 
·    Typically insured vehicles are insured for negotiated,
     predetermined agreed or actual cash value.
      
·    Collector car insurance is usually significantly less expensive
    due to the extensive restrictions and limitations that are in place. 

What should a car collector look for in an insurer? 

 Keep in mind the ways in which classic collector car insurance
 differs from regular car insurance.  A typical insurance agent
 isn't going to have the experience and expertise required to
 do the best job of searching for the insurance you need.  That's
 not a condemnation.  Rather it's a simple statement of fact. 
 So where should you look?   There are a number of excellent
 insurers that specialize in collector, vintage and antique vehicles
 of all sorts.  They may be represented by somewhat different
 difficult to find independent agents.  However they are well
 represented on-line and are easy to find. 

The questions we recommend you ask center upon two general
areas.  First, can the insurers serve your needs?  Is the insurer
licensed to sell insurance in your state?  How responsive is the
insurer to your questions and needs?  Longevity in the business
and large number of insured policies are good indicators on the
servers you'll receive.  What is the amount and quality of the
information provided by the insurer? It is very important to
ensure that he provides lots of high quality information because
that provides reassurance that you are making the correct choice. 
Having knowledgeable, informative staff to deal with also provides
great reassurance that you're making the correct choice.  When
you have questions that need to be answered, you want to have
them answered quickly and effectively.

Second, what is the quality of the insurer?  What is the insurer’s
A.M. Best rating?  It should be at least an A- to ensure that the
insurer will be there when and if you need them.  Similarly,
determine what company will be underwriting the policy issued
to you.  Then determine what the A.M. Best rating is for the
underwriter because you want to be sure that they too will be
there if and when your insurer needs them.  You'll get better
service if the insurer you choose is focused upon classic collector
cars as opposed to regular cars.  They'll know more about your
particular needs, how to provide the coverage you require and
how to service your claim if you have one.

What is the need for an appraisal of your collector car?

A current and accurate appraisal of the vehicle you wish to insure
is very important.  Without an appraisal from an appraiser whom
the insurers trust, you're flying blind. When it comes to the agreed
value that you want to insure your vehicle for how can you know
how much insurance you require without an appraisal?  The
insurer you select will be able to provide you with the name and
contact information required to allow you to engage an acceptable
appraiser.  Clubs and associations also know appraisers so don't
hesitate to approach your fellow members for information.  The
appraisal fee will be money well spent.

Document!  Document!  Document!  

It is to your very great advantage to extensively document all
aspects of your collector car.  First, there's the paperwork.  Is
the original build sheet available?  Do the numbers match up? 
Is the paint original?  All of these things affect the appraised
value of the vehicle.  Have any repairs or replacements been
done properly?  Were the parts used correct?   It is very
important that you create a photo and video record of every
aspect of the vehicle from the individual components of the
engine compartment to the interior, the frame and running
gear.  Record all view angles of the exterior and any other
restorable or repairable component.  Keep these records in
an orderly fashion and in a safe and recoverable place along
with the paperwork.  Every time you do some restoration or
make repairs, add to the record.  Doing so will provide huge
dividends when filing a claim for loss or damages or when
preparing to sell the vehicle.

Glossary of Terms:

Insurer                 A company that provides insurance for a particular
                             purpose such as auto, fire, medical, theft or flood or
                             other to those trying to protect themselves, their
                             families or organizations from loss.  Such companies
                            evaluate risk and set terms and conditions under
                            which they issue policies and set fees.

Insured                The person or entities covered by the policy
                              provided by the insurer.  Examples of an insured
                              are the policy holder named insured), a resident
                              relative (e.g. wife or child) or someone using a
                              vehicle with permission.

Underwriter            An underwriter is a company that provides secondary
                              insurance for the insurer, spreading the risk and
                              making it less likely that a disaster will affect the
                              financial viability of the insurer.

Deductible            The predetermined amount of money the insured
                              pays before the insurer pays any claim.  With regular
                              auto insurance, deductibles of $500 are common
                              and result in lower premiums.  With collector car
                              insurance deductibles can be negotiated to as little
                              as zero – that is no deductible.

Collision                Collision coverage pays for the damage and
                              the loss of use of the insured’s vehicle that
                              results from a collision with another vehicle or
                              object such as a bridge abutment or an overturning.

Comprehensive    Comprehensive coverage is other-than-collision
                               coverage that pays for damage to and loss of
                               use of the insured vehicle that results from an
                               unanticipated event such as theft, fire or striking
                               of an object on the road.

Liability                 Bodily injury liability and property damage liability
                              coverage is the maximum value of coverage provided
                              by the insurer to meet the determined legal obligation
                              of the insured.  Bodily injury is injury to a person or
                              persons as a result of an accident for which the
                              insured is legally liable.  Property damage is damage
                              to someone’s physical property, including loss of use
                              for which the insured is legally liable.

Agreed value        A predetermined amount of money assigned to the
                              replacement value of the insured property.  In the
                              case of collector cars, it is the agreed upon amount of
                              money that will be paid by the insurer in the event of
                              a total loss of the vehicle.

Appraised Value    The value of an insured property (e.g. a collector car)
                               that is established   by a recognized evaluator or appraiser.

Flexible Usage         Flexible usage permits the use of the insured vehicle
                               (with limitations) in multiple situations.  Some
                               permitted uses may be parades, car shows,
                               occasional pleasure driving, exhibitions, etc.

Muscle car            A vehicle, typically two door, built and sold by a
                              U.S. manufacturer in the 1960s and 1970s that
                              is powered by a large V-8 engine and has special
                              emphasis on performance.

Under-insured
Motorist                 Under-insured motorist coverage pays for bodily
                               injury sustained by an insured person that results
                               from an accident caused by an at fault driver who
                               has insufficient amounts of coverage to pay for
                               required treatment of incurred injuries.

Uninsured
Motorist                 Uninsured motorist coverage pays for bodily
                               injury sustained by an insured person that results
                               from an accident caused by an at fault driver
                               who has no coverage to pay for required
                               treatment of incurred injuries.  Likewise, this
                               coverage pays for injuries sustained where the
                               at fault driver does not stop at or flees the scene
                               of the accident

Applicant qualifications
 
The applicant qualifications are used by the insurer to define who
is or is not acceptable to them.  Examples of restrictions and limitations
are: age, number of years of driving experience, excellent driving
record, minimal violations by driver and household. 

What vehicles are considered for acceptance?

Any vehicle considered for acceptance for insurance must be good
or better condition or undergoing active restoration.  The vehicle
must be at least 15 years old.  It must be used as strictly as a
secondary vehicle and for pleasure only.  The following types of
the vehicles are often considered for acceptance:
 
·    Classic cars. 
·    Street rods. 
·    Antique cars. 
·    Muscle cars. 
·    Custom vehicles. 
·    Collector trucks. 
·    Kit car replicas that are professionally built. 
·    Military vehicles. 
·    Antique tractors
·    Hot rods  

What vehicles are not considered for acceptance?

Categorically, the following vehicles are not usually accepted
for insurance.
 
·    Any vehicle modified exclusively for racing with features such
    as wheelie casters, roll cages, nitrous systems, or parachutes.
     
·    Home built kit cars.
 
·    Off road, camping or utility vehicles.
 
·    1960-1967 Shelby cobra roadster replicas.
 
·    Any regular use vehicles used as daily drivers.
 
·    Commercial use vehicles primarily used for that purpose.

What general restrictions and limitations are imposed? 

Typical and frequently imposed a general restrictions and
limitations are: 
·    The insured vehicle must be stored in a locked garage or be
     undergoing active restoration.
     
·    There must be at least one regular use vehicle for each licensed
     driver in a household.
     
·    Each regular use vehicle must be insured through a regular
    policy with liability limits at least equal to that sought to collect
    classic collector vehicle to be insured.
     
·    Miles driven must not exceed a fixed limit (for example 3000
    miles per year).  

Coverage?

What does classic collector car insurance cover?  What does it
include?  The following are components of coverage that may
be expected with a good classic collector car insurance policy. 

·    Deductibles?  What are the options with respect to deductibles? 
    Deductibles can range from highs of from hundreds of dollars
    to thousands of dollars, with some as low as zero dollars

·    Liability?  How are liability issues handled?  For example Haggerty
    has one liability charge for all insured collector vehicles on the policy 

·    Repair shops?  Are you are you restricted as to what repair shop
    you can use?  The answer to this question is extremely important
    to most all collectors because they have obvious preferences as to
    who does the repair work on their vehicles.  

·    Additional vehicle purchases?  American collector offers $25,000
    as automatic coverage.  Haggerty says they will cover up to
    $50,000 in vehicle value.  And Heacock offers coverage to $75,000.  

·    Business use?  Some insurers do allow some use for business. 
    Each insurers policy in this matter is different so you must  refer
    to the insurer for specific conditions, coverage and instructions.

·    Shipping?  Each insurer has specific rate requirements with
     respect to coverage during shipping and sometimes requires
     that the shipped vehicle be covered under a separate rider on
     the policy.  Some of the insurers actually will insure vehicles
     being shipped to other countries by ocean freight.

·    Towing and labor?  Is towing and associated labor included
     in the coverage?  Can it be purchased as an add-on?

·    Inflation?  Does the insurer provide for automatic increases
     in coverage as the value of the insured vehicle increases? 
     The value of a collector car can quickly outrun the amount
     of insurance placed upon it so this can be quite important.

·    Spare parts?  Does the policy provide for coverage of spare
     parts?  Many policies do provide some coverage for spare
     parts.  However, many times this coverage is insufficient
     because the value of spare parts or restoration parts can
     be quite significant.  Therefore, it’s important to check this
     out if you have an inventory of collector car parts.

·    Restoration?  Is coverage provided for collector vehicles
    undergoing restoration?  They are quite vulnerable during
    this process and also very valuable.  Theft, theft of parts,
    malicious damage and fire are only some of the hazards
    that can occur during restoration.

·    Auto show medical?  Some insurers provide medical coverage
    for accidents that occur at auto shows.  This special coverage
    may be of interest to you if you participate in car shows on a
    regular basis.

·    Agreed value?    Does the insurer provide for agreed value
    coverage if you want it?  Considering the accelerating value
    of collector cars you certainly want to be sure that yours is
    fully insured.  Obviously, large deductibles and out of pocket
    expenses on a vehicle with appreciating value is very
    unattractive for a dedicated collector.

·    Auto Collectibles?  Many collector car enthusiasts also maintain
    elaborate collections of auto collectibles.  They too require
    protection from loss (especially theft) and may be covered by
    riders associated with your collector car insurance.  Ask about
    this valuable coverage.