Journal: How to Get the Right Insurance for Your Classic Car

How to Get the Right Insurance for Your Classic Car

Avatar By Benjamin Shahrabani
October 17, 2014
13 comments

Regardless if you have a car already, or are in the process of purchasing one, one thing that every owner will need—unless you live in the “Live Free or Die” state of New Hampshire—is car insurance coverage. Now, you may ask, “Why is Petrolicious telling me about something so obvious?”

If I have an accident while driving, or my car is stolen, I will be covered against damages and other losses. However, unlike modern cars it may make sense to seek out the different insurance to cover your classic. This is oftentimes best provided by a company that provides specialty car insurance.

Major insurance companies like Geico, Safeco, Allstate, AIG, and esurance offer policies, but there are several others that focus exclusively on specialty car insurance: Hagerty, Leland-West, Heacock, Grundy, and American Collectors are just a few of the names that operate in this field.

Let’s examine why a conventional policy might not be good enough.

Is conventional auto insurance good enough?

Unlike most modern cars, classic cars can actually appreciate in value as they grow older. Tabetha Hammer of Hagerty Insurance says that’s exactly the reason why you shouldn’t cover one of these vehicles with a standard car insurance company. “One of the most important things to recognize is that most daily driver insurance policies do not take into consideration the fact that collector vehicle values typically increase rather than decrease.”

Time for a lesson in insurance terminology: If you total your daily driver, your regular car insurance company pays you only the actual cash value of the car. When it calculates this amount, it includes the car’s depreciation in their formula. Because most modern cars are, with very few exceptions, worth less and less every year, you will not receive the full amount you paid for the car.

Classic cars can be insured for their agreed value or stated value. You and the specialty insurance company accord a value for your classic and it agrees to pay up to that amount in the case of a total loss. Matt Robertson, of Leland-West Insurance, says it all comes down to a term called “agreed value”.

“Collectors and enthusiasts choose specialty insurance carriers because first and foremost they want an agreed value, once they learn what that means,” Robertson says. “A given vehicle’s true market value may exceed—sometimes dramatically—what a book or online source publishes. If the worst happens and the car is totaled, they don’t want any surprises. Only an agreed value policy offers a known, etched-in-stone value on their car that will be paid in the event of a claim.”

How is my car’s value determined?

The specialty car insurance companies have their eye on the pulse of the collector car market, and are constantly monitoring trends in the marketplace, auctions, and other sources for the most up to date pricing information.

Hagerty also publishes its own proprietary price guide which is a great tool for any enthusiast, and provides the company’s viewpoint about where prices are trending for a particular car.

Selling price is a factor, but most every company will work with you to assess an accurate value of your vehicle. For something truly specialized, an appraisal of your vehicle might be needed.

Are there restrictions?

In a nutshell, yes. Firstly, your car has to fall into one of several collector car categories to qualify for this special collector car insurance, and each insurer has a different list of prerequisites. Your car (or cars) must be stored in a secured location, and there are some usage restrictions as well. As cool as your car is, and as much as you want to drive it every day, you can’t use it as a daily driver. While all companies have specific restrictions, Tabetha Hammer says Hagerty’s are typical for the industry.

“Our policy allows you to use your collector vehicle for club functions, exhibitions, organized meets, tours and even pleasure driving—it just can’t be your daily driver,” she says.

Every owner’s situation will be different, and there is no one solution. If you have a specific question, ask a company representative. Some allowances for flexibility can be made, but they may cost an additional premium. Leland-West offers an endorsement that allows some limited to and from work driving, for instance.

Do I need to have modern daily driver to qualify?

Yes. Every company offering these policies makes it clear that the cars you insure with them are for a limited “pleasure only” basis, so you must have a separate, properly-insured car for daily driving chores. Because most specialty insurance companies limit the number of miles you can drive your car each year, and place other restrictions on their use, that makes specialty coverage more affordable than you may expect.

“The average premium of a Hagerty policy is on average 45% lower than daily driver insurance,” says Hammer. After all, the less time you spend on the road in your daily driver, the less likely you are to have an accident.

Are there mileage restrictions?

Most of the specialty car insurance companies put some limits on how much you can drive. You can buy a policy for more mileage or even unlimited mileage from some, but it will cost more. There’s no such thing as a free lunch. Check with your insurance company, but generally the closer to home you stay, the lower the premium.

Can my highly-modified car be insured?

Yes. But check and disclose those modifications to the insurance company before you sign up for a policy—it prevents problems from arising later.

Most conventional insurance companies have no love for modified vehicles. Robertson perhaps sums it best by saying, “if it has at least four wheels and its cool, we want to do it”—but first report the mods to your vehicle.

You are entering into a contract with the insurance company when you take out a policy, and like you, it has certain obligations to fulfill. Disclosure ensures that you’ll covered in a time of need.

Can I race my car?

No…and yes. Specialty car insurance companies will insure your car, but not while they are running on the track. The price for this coverage is very low, because for the most part, your car spends 99% of its time off-track.

If you want to race, or participate in a track day—and want to have full confidence that you will be insured should something go wrong—you will have to purchase a separate policy from an even more specialized niche of car insurance provider.

What if I’m restoring my car?

Yes, again. The policies are generally very low cost, as the car is off the road while you nurse it back to health. Being off the road means you don’t need to maintain certain components of insurance like liability—your car won’t be the cause of any on the road accidents.

You might need to tell the insurance company where the car is being restored, as your car will likely be kept in a different place, like at a mechanic or restoration shop.

Saving on insurance is great, but keep in mind that as the value of your car increases from the work you’re undertaking, you should reevaluate its worth with your insurer.

I have a lot of expensive spare parts. Are they covered?

You’ve put some rare parts away for a rainy day…or just because you might never find a specific part again. (Or you’re a hoarder.) We get it, and so do the insurance companies. Many cover your spare parts for loss, to a predetermined limit. You can, however, always purchase additional coverage with a higher loss limit.

It will cost extra money, but it’s added peace of mind that your rare early Porsche 911 sport seats or Rudge wheels will be covered if they are destroyed or stolen.

What happens if I have an accident?

OK, you’re insured…but sadly, you have to make a claim.

By and large the claims process is the same as with your regular insurance company: an adjuster is assigned to your case, and will discuss the loss and damages with you.

Where the process differs from your standard insurance company, says Leland-West’s Robertson is that classic car insurers are much more in tune with the repair costs of often rare and more unique cars.

“In this case, you’re dealing with someone who is trained to understand the situation and not lose his or her mind when you have a broken windshield thats going to run $10,000 to replace,” he says. “This is the business we are in. It is also expected that you will take the vehicle to the shop of your choice. We don’t do the three-estimates thing and neither I suspect does anyone else in the specialty market.”

At Hagerty, Hammer echoes this sentiment, and the company even retains its own parts concierge.

“We offer stock original replacement parts to ensure your investment is covered and your car is restored to its former glory. Our on-staff parts specialist will hunt down rare and hard to find parts and you can pick the repair shop of your choice. And if nobody touches your car but you, we’ll even pay you to do the work.”

Is my car insured during shipping?

Yes. While best practice dictates you should ship a vehicle using a professional, insured transport company that has their own coverage that coverage, all insurance policies include a provision within them that gives you automatic coverage on a new vehicle purchase with some limits to the potential loss.

However, once you report the car to your friendly specialty car insurance company, and your policy has been approved, you’re covered to the limits of your policy. Overseas shipping (and use) is generally not covered. For that, you’ll need to purchase a supplemental policy, which would be good if you’re participating in the Mille Miglia or Holy land 1000, for instance.

Roadside Assistance

Specialty car insurance companies know their clientele, and don’t want you stranded by the side of the road.

If you experience a problem, most of these companies promise great service by providing a roadside assistance center staffed with collector car experts, and a flatbed tow truck so your car won’t suffer the indignity of being towed by only one pair of wheels. Hagerty’s service even brought some gas for a car stranded on the first Petrolicious Malibu Rally!

I’m a younger driver. Do I qualify?

It depends on the company, and how young you are, but generally younger drivers are welcome too—as long as they have several years of driving experience, and generally speaking, a clean driving record.

The collector car hobby is getting more youth-oriented every day, and companies recognize that. No teenage drivers though.

A specialty car insurance is probably more expensive…right?

Beyond driving their cars less, Robertson of Leland West says that owners themselves often help to keep premiums low.

“Owners of these sorts of cars tend to be very protective, and take very good care of them. In recognition of this extra level of care, love and attention, rates are lower. That’s the insurance company giving some back.”

In a nutshell: keep babying your baby, keep a clean driving record, and you’ll be rewarded with low rates.

***

Your satisfaction with your insurance carrier is important, and nobody really knows how good their company is until they, unfortunately, have a claim.

Every company claims to offer top notch customer service. Robertson says Leland-West has a competitive advantage in pricing, usage rules, and coverage options over many of our competitors.”

While Hammer adds, that Hagerty distinguishes itself by its, “expert in-house claims handling (that) allows us to provide better, faster service; and our extensive knowledge of classic vehicles and the restoration/repair processes provides an unsurpassed client experience.”

As well as by supporting initiatives within collector car community. Most everyone knows that one should research any company before signing up. Claims satisfaction and service are two important factors. Two other important terms that people might not be aware of are NPS scores and A.M. Best Company ratings.

The former is a score about the company’s overall satisfaction rating from clients. The latter is a great tool for finding out the insurance company’s financial stability.

There are no “one size fits all” answers to insurance. Everyone’s situation is different. Best practice suggests that you review any classic car insurance policy and review the valuation statements and usage restrictions to confirm that they work well for you, but both Hagerty and Leland West are staffed with dedicated individuals who understand your car isn’t a Toyota Camry.

In fact, both Hammer and Robertson are not only classic car professionals, they are also owners of some vintage iron themselves, as are many others in their organizations. Give them and others a call. If you own a vintage car, you’ll be happy you did.

Sample chart of some classic car insurance companies below.

Thank you to Tabetha Hammer, Affinity Communications Manager of Hagerty Insurance, and Matt Robertson, CEO & Head Honcho of Leland-West for their contributions to this article 

Image Sources: How To Crash a Vintage Rally and Get Away With It / In Photos: The Outstanding Maserati Ghibli Spider / This Alfa Romeo GT 1300 Junior Is For Life /A Shelby Mustang Is a No Brainer 1961 Ferrari 250 SWB

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Matt Robertson
Matt Robertson

Mr. Morissette brings up some good points. The consumer’s takeaway from this is that what he is describing should be considered standard practice for [b]all[/b] specialty insurers. This can be in stark contrast to the popular perception of insurance companies that give people a difficult time when it comes to getting fair value or proper repair. Specialty carriers live and die by their reputation in the community – and we all know car guys talk a lot on the web :-). As I mentioned above, Agreed Values are often set with more than ‘book’ value in mind. To add to… Read more »

Paul Morrissette
Paul Morrissette

I work for Chubb Collector Car Insurance and can address some of the questions raised in the earlier comments. When establishing the agreed value for your collector cars, Chubb considers factors such as market value trends, your restoration costs, and any special parts or custom work you may have performed. We recommend speaking to your Chubb agent or contacting us at [url=”www.chubbcollectorcar.com”]www.chubbcollectorcar.com[/url] to discuss your specific situation. In most states in the US, Chubb will consider a collector vehicle to be a total loss when the damage reaches the agreed value amount, an advantage when compared to insurers who may… Read more »

Xavier Corral
Xavier Corral

Any advice for a 25 year old with no garage and a less then stellar record? Currently on Progressive and have heard good things. I drive my car everyday. 1987 Grand National. Drive my 1970 mustang on rainy days.

Alvaro
Alvaro

Could you please add a footnote to the pictures stating which car/year/make is being shown?

Dennis White
Dennis White

Full disclosure, I’m in the biz. Good info and all good carriers, but missing a major player… Chubb. Even with “agreed value” most carriers will only pay the market value for a totaled car. Chubb will pay the cost to repair/restore a car even if it exceeds the market value. May not be critical in the case of multi-million dollars Ferrari’s but something to consider for us lowly folk with classics under a couple hundred thou!

Matt Robertson
Matt Robertson

You said “even with ‘agreed value’ most carriers will only pay the market value”. This is untrue, so long as the carrier actually provides ‘agreed value’ coverage. I am unaware of any carrier who misrepresents ‘agreed value’. As such Chubb is no different from all of the other providers in this respect. It sounds like you are describing ‘stated value’ policies, in which case what you say is correct. A stated value pays only the stated value or the actual cash value, whichever is LESS. Stated Value is a basis for the premium paid not the recovery amount. Many agents… Read more »

Dennis White
Dennis White

Matt, I agree regarding the difference between agreed value versus stated value. I didn’t want to get too technical, but my real point is that I don’t believe any other carrier will assign an agreed value limit including additional unknown restoration costs exceeding current market value. For example, $100K for a full resto for an Alfa worth $75K as concours. Am I wrong?

Matt Robertson
Matt Robertson

If Chubb will insure a $70,000 car for $100k… or for an open ended amount, whatever it takes to rebuild it from the ground up, then thats frankly news to me. I’d want to see that provision in writing in the insurance contract. Don’t take this wrong but I have been through many, many experiences where an agent has one perception of coverage and the policy language and underwriting department has another. If what they’re doing instead – and this seems likely – is not doing what you are describing and instead being somewhat generous with the allowed Agreed Value… Read more »

Dennis White
Dennis White

Well Matt, having now taken a good look at my own policy I stand corrected! (Should I admit I hadn’t looked at it that closely?!) When Chubb rolled out its program a marketing rep had pitched the uniqueness of true replacement cost without limitation (some Homeowners policies provide this, or somewhat limited), but the policy shows the coverage to be similar to that of the other carriers, with the agreed value being the max. Now I’ve got two issues: first, to get to the bottom of what we were advised; and second and more importantly, to get my agreed value… Read more »

Matt Robertson
Matt Robertson

Dennis I checked directly with Chubb Collector Car: They offer the sort of Agreed Value that is described here in this article. There is no provision for ‘additional unknown restoration costs’ or similar. This is not to take away from the coverage Chubb offers – they are among a relatively short list of vendors who provide what is the best standard of vehicle valuation available to the car enthusiast and collector.

Matt Robertson
Matt Robertson

Dennis I checked directly with Chubb Collector Car: They offer the sort of Agreed Value that is described here in this article. There is no provision for ‘additional unknown restoration costs’ or similar. This is not to take away from the coverage Chubb offers – they are among a relatively short list of vendors who provide what is the best standard of vehicle valuation available to the car enthusiast and collector.