How to Insure a Classic or Collector Vehicle
As a collector, you probably view your classic or antique vehicle not only as a hobby but as an investment as well. Protection of your investment includes many things, such as proper maintenance, keeping it clean, and parking it in a safe spot. It also includes buying the right insurance policy to protect it from damage.
While you may think that a standard car insurance policy is enough to cover a classic vehicle, there are actually more suitable policies for collectibles. Standard policies only will cover a car up to its Actual Cash Value (ACV). While the ACV for non-collectible is constantly depreciating, the value for a collectible is always increasing (in a perfect world).
To illustrate how this works, think about your 2-year-old Honda Accord or Toyota Camry that you use to commute to work every day. At this point, it’s probably worth about $15,000. If you get into an accident today and total your car, the insurance company will cut you a check for $15,000. If you do not get into an accident today, but rather drive the car for 10 more years and then get into an accident, the insurance company will cut you a check for $5,000, or whatever the vehicle is worth 10 years down the road. The reason for this is that vehicles covered under a standard policy are thought to be constantly depreciating. When you insure these types of vehicles, depreciation is worked into the price of your premium.
Now, with collectors insurance, your vehicle will be insured up to an agreed-upon value, usually determined by a classic vehicle valuation guide or an appraisal by an insurance underwriter. For example, if your 1963 Corvette is valued at $150,000, it won’t be subject to the automatic depreciation valuations that the Accord or Camry mentioned above will be. The classic vehicle, with proper maintenance and care, will appreciate in value over time, and therefore need periodic valuations to determine premiums.
How old does a car have to be to be considered ‘classic’ for insurance?
The legal definition of “classic car” varies from state to state, so in order to be sure which vehicles are considered classic in your neck of the woods, you should contact your state DMV to ask them. In general, however, a classic car is any vehicle older than 15 years. An antique car is any vehicle older than 25 years.
Collectors have a different definition of the terms “classic” and “antique.” In the eyes of the Antique Automobile Club of America (AACA), which has been around since 1935, classic cars are vehicles that are between 25 and 50 years old. If the vehicle is over 50 years old, then it is considered an antique. The Classic Car Club of America (CCCA) has a different definition. To them, only cars made between 1915 to 1948 can be considered “full classics.” They are always expanding their list, however, so be sure to check their website for updates.
Insurance companies have yet an even different definition of “classic.” To them, if your car is at least 15-20 years old, parked in a garage, and driven less than 2,500-5,000 miles per year, then it can be considered a classic car. If your vehicle meets these guidelines, ask your insurance provider whether or not it qualifies to get special classic car insurance.
Is it cheaper to insure a classic car?
Many classic car owners insure their vehicles with a standard car insurance policy without realizing that a classic car insurance policy could be much cheaper. Not only are they cheaper, they are tailor-made to cover classic cars, so they insure more situations that a classic car owner could find themselves in.
According to State Farm, it would cost $470 annually for a good driver (perfect driving record, 30+ years driving experience, etc.) to cover a 1968 Chevrolet Camaro with a standard policy. If you bought a classic car/collector policy, however, your rates would drop to $380 annually.
The reason for the lower rates is because classic car owners do not use their collectible as their daily driver. While you might use your “everyday vehicle” to drive to work, drive to school, pick up the kids, go on a day trip, drive to the mountains or beach, etc., your classic vehicle will probably only be driven a few times per year. When you are only driving to places like car shows or around your neighborhood (to show off), your chances of getting into an expensive accident drop drastically. This is why annual premiums for classic/collector/antique car insurance are lower than those of normal policies.
What kind of coverage should you buy for your classic car?
Much like with standard policies, collector policies will usually be for 6 or 12 months. They can include coverage types such as liability, collision, comprehensive, personal injury protection, uninsured/underinsured motorist, and medical payments. Keep in mind that your state will have minimum coverage requirements in order to drive your vehicle on the road. The standard policy collectors policy will have liability coverage and some form of comprehensive/collision coverage. Additionally, there are some other coverage “add-ons” that collectors like to purchase to further protect their investment. They are:
- Roadside Assistance Coverage – This covers towing, battery jump-starts, and gas refuels. Since you are driving an older vehicle, chances are it good break down on the side of the road. Roadside assistance coverage will pay for the tow truck to drive your classic car to a repair shop or back to your home.
- Car Show Medical Reimbursement – If you are displaying your vehicle at a classic car show or exhibition and one of the attendees injures himself or herself in your vehicle or in your exhibition space, this coverage option will pay for his or her medical bills.
- Traveling Coverage – If your vehicle breaks down on the side of the road (which can and will happen with these older collector cars), this coverage can pay for food, lodging, and a rental car until you get back on your feet.
Where to buy collectors car insurance?
There are many specialized insurance companies that focus mainly on insuring collector, classic, and antique vehicles. These carriers include Hagerty, Grundy, American Collectors, and J.C. Taylor. If you want the absolute best coverage for your vehicle, chances are you will get it through one of these providers.
If you would like to save some money on your insurance coverage, realize that State Farm, GEICO, Progressive, Farmers, Esurance, and many other nation-wide auto insurance providers also offer coverage for classic vehicles. If you contact your current insurance provider and ask them about this type of coverage, chances are you can “bundle” collectors insurance together with your auto insurance, home insurance, etc. so that you can take advantage of the combined policy discount.
Whatever your choice may be, realize that your classic car is a valuable investment that should be safeguarded. Along with proper maintenance and care, insuring your vehicle is the number one way to protect it for the long term.