How to Insure Your Classic Car

Insuring classic and specialty cars can be confusing for the first time buyer, because how you cover the car depends on how you're going to use it. If you've never owned a classic before, you may not know the right questions to ask your insurance agent. And if your agent isn't familiar with classic cars, they may not know the best way to insure yours. Finding out the hard way that your precious investment wasn't covered properly will not make the ownership of a classic car a happy experience.

Ask yourself if you would need any of these seven situations to be available from the company you insure your classic with.

1. Being able to use your own mechanic for repairs
2. Insured for what you feel the cars actually worth
3. Liability insurance when participating at club events
4. Coverage for damage incurred at car shows
5. Insurance coverage during restoration
6. Flexible premiums based on miles driven per year
7. Coverage for shipment to out of state or overseas events

If you answered yes to at least three of those situations, you may want compare programs and quotes from a few collector car insurance companies.

Specialty car insurance has been available for decades, but statistics show that fewer than half of the collector vehicles on the road today are insured by specialty programs. We find that very interesting - our experience has shown that standard insurance companies often charge higher premiums for more restrictive policies, when it comes to insuring classics.

Having said that, there could be qualifiers that need to be met for insurance through specialty programs, such as:

• You must own and use a daily driver vehicle
• The car may need to be a certain age or older
• You may need to be a certain age or older
• The car may only be driven 2,500 miles per year or less
• The car may only be driven for certain activities
• The car may not be driven for commercial use

Terminology used with collector car insurers can be also be confusing, so don't assume anything. Ask hypothetical questions in regards to how they would handle a specific claim, such as “what would happen in the event my car was a total loss”. Each company might answer that question differently. We know of three types of automobile insurance coverage offered for the total loss of your vehicle: Actual Cash Value (ACV), Stated Value, and Agreed Value. ACV coverage is what insures most everyday cars and pays out a depreciated 'book' value in the event of a claim; the older a car is on an ACV policy, the less value it has. Some insurance companies offer Stated Value policies for collectibles. These policies are better than ACV because they allow you to 'state' a value for your vehicle that is greater than its depreciated 'book' value. But, Stated Value can still depreciate vehicles because the policies generally require the insurance company only to pay up to the 'stated' amount. Only Agreed Value insurance policies guarantee you will get all of your money back in the event of a total loss.

There are varied levels of service, rates and types of coverage and claims handling with standard car insurers. The same is true with specialty car insurance companies. Anyone insuring their classic should dig deep and research all options before making a final decision. Cost should be considered, but in our opinion, should not be the determining factor. When buying insurance you are buying a service; look for quality customer service, excellent claims handling and a knowledgeable staff who know and understand collector vehicles. An insurance policy may only be as good as the staff that is processing your claims.