A Separate Classic Car Insurance Policy Is Essential

Article by Fredrick Michaels

Classic cars fall within a very broad category that includes any motor vehicle considered collectable. Market values are set by the demand to acquire the make, model, and year of a certain vehicle, and the value will steadily climb over time. Insurance is a very specialized market segment that is underwritten by less than five percent of all automobile insurance companies. When seeking to insure a classic car, consider the policy form, coverage and limitations, and the requirements for qualifying for insurance.

Insurance agents that participate in the hobby understand the nuances of insuring a vehicle with a set value. The policy form is very important when underwriting a classic car. The Agreed Amount, or Agreed Value, form must be used when the policy is purchased. The agent and the insured driver will actively agree on the amount the policy will pay in the event of theft or total loss in an accident. There is no “actual cash value” clause on the policy form that would allow the insurance company to pay less for the car. Agreed Value insurance policies grant peace of mind for the driver whose car is unique and irreplaceable. When the driver incurs loss, a comparable uses to the money paid by the insurance company.

Classic car insurance policies place some limitations on the level of use allowed for the car. Fewer than 2,500 miles per year are allowed to be driven on most policies, but some policies allow up to 5,000 miles per year. The classic car is driven occasionally for special events and is not considered an everyday use vehicle. When repairs to the car are required, the insurance policy covers the acquisition of original parts, and the repairs will be made in a specialty repair shop that might cost a great deal more than the average repair shop. The value of the car can be impacted directly by the parts used for repair. When original wheels or steering wheels are present on the car, the insurance policy can cover these very valuable features.

Drivers who wish to qualify for a classic car insurance policy must pass stringent underwriting criteria. Excellent driving records for all drivers are important, and young drivers are discouraged from driving the car. Special car care requirements are stated within the policy, including garage storage. Driver age is considered a mark of maturity, which plays a direct role into the premium set for the insurance policy. Most classic car policies require the driver to have another car in their name that is for everyday driving.

Research the few classic car insurance companies and look for an agent that will agree with your requirements for a separate policy. There are some agents that will try to convince you to place the classic car on your existing policy. If a claim must be filed, the value of the car will never be paid under a standard car insurance policy. Know the market value of the car, and be prepared with the agreed value prior to meeting with the agent. No one wants to make insurance claims, but if payment is requested you can rest assured that an Agreed Value insurance policy will pay to buy a comparable classic car.

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