What You Need to Know about Insuring a Classic Car
What makes a car classic?
Age – many vehicles over 25 years old are considered classic. Since at 25 years old a stock vehicle has been fully depreciated, you need a different insurance product to recognize the value of this older vehicle.
Make / Model – If the manufacturer has significantly changed or discontinued the vehicle in question, it can be considered an instant classic. Recent examples may be Dodge Chargers and Challengers that are no longer being produced. Corvettes and other sports cars with specific models may make the car classic for a collector when the models change. These vehicles have values that defy standard depreciation schedules.
Drive train – A high performance engine, transmission, and rear end set up can make a car classic by making most insurers reluctant to provide coverage. Since these modified vehicles may have potential racing use, they fall outside of the appetite for many insurance companies. Valuation on a highly modified vehicle falls outside the scope of many insurers guidelines.
Customization – Hot rods, rat rods, and low riders are some of the various types of modified vehicles that defy conventional valuation tools. A vehicle with a mixture of frame and body parts from different manufacturers or years may also be difficult to pigeonhole in a specific make/model description. As a result, these vehicles may not be insurable under standard policy terms.
Why consider classic car insurance programs?
Value recognition – This is the most common reason for classic car insurance. If you enjoy watching car auctions on television, a 1970 Chevrolet Chevelle that brings $110,000 at auction would be virtually worthless with standard depreciation. Since the standard personal auto policy uses “Actual Cash Value” which is the depreciated value of the vehicle, as the basis for adjusting claims, the owner of this $110,000 vehicle could never get a settlement close to the sales price.
Use of the vehicle – A standard auto policy will assume the vehicle is used as a daily driver. Most classic and collectible cars are not daily drivers. The lower use is a significant factor in the cost of coverage.
Loss adjustment – At time of loss, a standard carrier may use a third-party inspection service to look at vehicle damage. This third-party inspector will not have the necessary experience and education to inspect, assess and adjust a claim for a classic or collectible vehicle. Staff inspectors who look at daily drivers will also lack the experience needed for this type of vehicle inspection and damage assessment.
Repair process – The collectible or classic car will not be repaired at a body shop or repair center that is part of the national network used by insurance companies. Standard market body and paint shops are not prepared for the custom work and finishes that are on most classic and collectible vehicles.
Repair parts – Most auto insurance policies allow the use of aftermarket, remanufactured or salvaged parts if they are deemed “like kind and quality or equal fit and finish” by the insurance company. Use of parts other than Original Equipment Manufacturer (OEM) may not be suitable for classic or collectible cars. If parts are not available, then restoration work to repair the original damaged parts or replicating those parts may be needed.
Diminution of value – The Carfax commercial hypes the diminution of value related to accident damage to a car. This is even more critical when work from a specific shop cannot not be replicated as that shop is no longer in business, or the parts for that vehicle are simply not available. Swapping out engine or drive line parts that disrupt the “numbers matching” status of a vehicle is not an issue standard insurance considers. For a classic car owner this may be a deal breaker. Many standard insurance policies may exclude any diminution of value claims.
What to look for in a classic car insurance program
Valuation - The primary difference is that classic and collectible cars are written on the basis of agreed value. This value is not subject to depreciation and is agreed upon by the policyholder and the insurance company. Most classic car markets have their own in house valuation experts to review your submission and reach the agreed value with you. Having this valuation option is considered a basic requirement for these programs.
Use restrictions – Most classic car policies require that you have a daily driver. The travel to car shows, some personal use is permitted. The basis for the requirement that you have a daily driver is the discount offered for the vehicle not being on the road routinely. Classic car insurance may have requirements that the car is in a garage and that when traveling to shows the car is protected with a car cover. Make sure you understand any use restrictions or storage requirements in the program.
Enhanced roadside assistance – The classic car insurers have their own network of roadside assistance providers that use flatbed recovery vehicles, soft straps, and tie downs. This is to protect your classic vehicles finishes and take care of its frame and suspension. Determine if this if available and how important this is for you.
Claims and restoration management – Classic car insurers have dedicated staff adjusters and restoration consultants to work with you to get the proper repairs, collision, and refinishing services for you. Does the insurer offer the right services and service network for your needs? Restoration and repair are very distinct processes.
Fleet coverage – Some classic car carriers can insure your classic car and your daily driver. You would not need separate insurance policies. Some standard market companies offer classic car endorsements to their policies. Consider the standard market carriers ability to provide some of the services mentioned above if you choose to use an endorsement for your classic car.
The Driehaus Difference
We can help you find the right policy to protect your classic or collectible car. This is not an “only pay for what you need” situation. If you are not comfortable with the unique insurance concerns for these vehicles, you can be in for an unpleasant claim settlement. Call us at 513-977-6860 or contact us via our website driehausins.com to get in touch with an expert to help you. We want to be your insurance provider.
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