Auto insurance for classic cars

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Classic and antique car owners have special auto insurance needs. Their cars are typically not on the road every day and generally used for limited pleasure driving, car shows and club events. If you own a classic car, it’s a good idea to shop around for affordable car insurance rates. You may be able to receive a good deal from your current car insurance company or you could check out a specialty car insurer.

Ask your car insurance agent this:

• Will my car qualify for insurance as a classic car?
• Is this an “agreed value” policy?
• Do I need to hire an appraiser?
• Do you need to approve the appraiser I hire?
• How often can I drive my car?
• How do I need to garage it?
• What kinds of discounts do you have?
• Are there any cases where you might deny my claim?
• What are my liability limits?
• What is the limit on the collision coverage?
• What is the limit on the comprehensive coverage?

“Whether it’s a 1932 Alfa Romeo or a 1962 Ferrari, antique and classic car owners should purchase auto insurance coverage for their collectible separate and apart from the policy that covers their regular-use vehicle,” said Michael Barry, spokesperson for the Insurance Information Institute (III), in a statement. “While regular-use vehicles depreciate in value over the years, many classic cars appreciate in value and have to be insured accordingly.”

How car insurance companies define a classic car

Exactly what qualifies as a “classic car” varies among organizations and car insurance companies. The Classic Car Club of America defines classic cars, American or foreign- built, as those produced between 1925 and 1948. They were generally built in limited quantities and expensive when new. III defines classic and antique cars as those manufactured 30 or more years ago.

Heacock Classic Cars, a division of Sebring, Fla.-based Heacock Insurance Group, Inc., an independent insurance company in business since 1922, expands the definition further. It defines “antique” cars as those manufactured more than 25 years ago, while “classic” cars are those built 15 to 25 years ago. Cars less than 25 years old generally fall into the insurer’s “late model” or “exotic” designations, says Stacey Heacock, national sales manager for the insurer.

The market for classic cars isn’t small. More than 6 million individuals are classic car collectors and 25 million are classic car enthusiasts, according to AutoTraderClassics.com, an online marketplace dedicated to the classic car sector.

Classic car insurance policies

Insuring a classic car is significantly different than getting a car insurance quote for the family automobile. Many of these cars are rare and their owners shower them with devotion and expensive features.

“Collector car owners usually have an emotional attachment to their vehicles, which is not the case with the typical family vehicle,” says Heacock, who oversees the collector car insurance market for more than 2,000 independent insurance agencies in the United States. “These are cars that owners have either lusted over since they were a teenager or spent hours of blood, sweat and tears restoring or repairing. As a result, the owner wants to be assured the insurance value at claim time will be equal to the full value of the car.”

Classic car insurance policies also differ significantly from standard policies when it comes to how a loss is settled after an accident or theft, Heacock says.

“Actual cash value” vs. “agreed value”

Car insurance companies value standard cars based on “actual cash value,” which takes depreciation into account. A collector car insurance policy, however, is usually written on an “agreed value” basis, meaning the owner will be paid the full value of a vehicle if it’s lost or stolen, Heacock says.

The “agreed value” insurance agreement applies to physical damage caused by collision, fire, theft, vandalism or other types of damage, Heacock says.

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Lower car insurance rates, but with restrictions

Sample car insurance rates for classic cars

• 1968 Dodge Charger R/T stock – ($46,000 agreed value policy), annual premium: $376
• 1970 MG B stock – ($5,000 agreed value policy), annual premium: $112
• 1978 Chevrolet Corvette stock – ($18,500 agreed value policy), annual premium: $211
• 1987 Buick Grand National stock – ($24,000 agreed value policy), annual premium: $363
• 1995 Lotus Esprit stock – ($32,000 agreed value), annual premium: $487
• 2010 Dodge Challenger R/T stock – ($40,000 agreed value), annual premium: $800

Source: Heacock Classic Cars

Car insurance quotes for classic cars vary somewhat depending on the value, age, type, and use of the vehicle, Heacock says. The typical savings for collector car insurance rates can be anywhere from one-third to one-half of the insurance rate for the family auto, she adds.

Though classic cars can cost less to insure than a standard vehicle, your classic car policy is likely to have restrictions. They can include:

• Limits on how many miles you drive the car each year
• Mandates on how the car is stored (usually in a secured garage)
• Restrictions on who may drive the vehicle

For example, Heacock’s standard classic car policies offer annual mileage options of 1,000, 3,000 or 6,000 miles.

“The insurance premium needs to reflect the limited use and better care,” Heacock says.