TIPS - INSURANCE
Collector Insurance Guide
Collector Car Insurance: The Basics
What You Should Know
You finally found the car you've wanted your whole life. So now
what? The next step is to protect your investment. There are
a lot of choices
out there, but a basic auto policy may fall short for your collector
car needs. This article offers the basics on collector car insurance
and provides guidance in selecting proper coverage for your collector,
as well as an appropriate provider.
Standard vs. Specialty
Standard insurance annual premiums can cost a great deal more than
those offered by a specialty program provider who better understands
the nature and purpose of a collectible vehicle. Although standard
companies can provide adequate coverage for a daily driver, they
rarely offer the added benefits associated with collector car
programs. In most cases, you'll pay a significantly higher annual
with standard insurance, and the coverage will be inferior. Additionally,
you'll probably pay fees for liability coverage on each vehicle,
whereas a specialty policy may only charge a single liability
fee for your entire collection.
According to Hagerty Insurance, less than half of the collector
vehicles on the road today are insured by specialty programs. Although
collector car insurance has been available for five decades, most
owners of collectibles, specialty cars and street rods are still
insuring them through a standard insurance company despite the higher
cost and often more restrictive policies.
When your collector is driven only occasionally for pleasure drives,
club events, special excursions, perhaps 1,000 or under 5,000 miles
a year and not used for transporting passengers or for business,
it's time to enroll those cars in a "collector car" specialty
insurance program. The basic premise of collector car insurance is
that you have a daily vehicle that's insured elsewhere, and many
collector-car programs will require you to have at least one other
car in your name for everyday use. There are several specialty insurance
providers available to suit your needs and usually, it's cheaper
to insure a classic/collector car than it is to cover a new vehicle.
Types of Policies
Insurance companies will use one of three different policy forms.
Actual Cash Value. This policy coverage insures most everyday
cars and pays out a depreciated "book" value in the
event of a claim. With this coverage, the insurance company claims
ultimately decides what your collector car is worth at the
the loss making this an undesirable form of coverage for collectible
cars that have a tendency to appreciate.
Stated Value. Policies that allow you to "state" a value
for your vehicle greater than its depreciated "book" value.
One important factor to remember is that a Stated Value can still
depreciate vehicles because the policies generally require the insurance
company only to pay "up to" the "stated" amount.
Agreed Value. Insurance policies that guarantee you'll get
all of your money back in the event of a total loss. There's
depreciation of a car's value with an Agreed Value policy.
have stable values and slowly appreciate over time. Because
the values are stable, an "Agreed Value" insurance
policy should be obtained to protect your collector cars. Under
if your car is stolen or totaled, you'll receive the Agreed
Value listed in writing on your auto policy. You simply agree
value of your collector car with the insurance company. In
the event of
an accident, you'll be covered up to the dollar value of the
policy. This type of coverage is the way to know in advance
how much you'll
receive from an insurance company if your car is totaled or
stolen. With Agreed Value, you'll get the amount listed on
which is also the basis of your premium. The insurance company
you the lesser of: the agreed amount or the cost to repair
the covered auto, not to exceed the agreed amount. Finally,
should represent the market-reflective value of the car at
the time the policy is written. If the market value changes
period, the agreed amount should be changed by endorsement.
Before a policy renewal each year, the agreed amount should
if necessary, to reflect current market value.
Collectors should consider the types of restrictions that accompany
a specialty policy and find one with flexible usage guidelines
that best suits their overall needs. While many specialty programs
strictly limit owners to driving their collector vehicles to
2,500 miles per year, some providers offer more flexible usage
For instance, if the insured has a daily driver in addition to
his/her collector vehicle, the mileage on the collectible vehicle
may not be strictly limited - assuming it's driven on a limited
basis consistent with owning a collector. Something else to keep
in mind is that most specialty insurance programs don't allow
vehicles to be used for the commercial transportation of goods
racing or daily transportation.
While the popular standard used to be 25 years and older for vehicles
covered, it's always best to inquire on a per-vehicle basis. There
are new cars that are insurable as collector cars-including kit
cars, replicas and modern classics.
Exotics. Coverage for exotic vehicles, whether new or collectible,
is available. Exotics that are considered collectible vehicles
and won't be used on a regular basis are easier to cover, due
fact that it generally indicates the car will be garage kept
Street Rods and Customs. The uniqueness of these vehicles lends
to some differences in how they are insured. The difficult
part is determining
the actual value of these custom vehicles. The quality of
the parts used, as well as the workmanship employed, is an
which isn't easily valued in every case. Often there can
be a premium placed on a vehicle that was constructed by a
vehicle builder. It's also recommended to get your street
rod or custom appraised by a licensed appraiser for its actual
Young drivers. Many specialty insurance companies require
that all drivers be 25 and older; some even require that
be 30 years
of age. Some providers will be more flexible on the age
limit, but generally won't accept an owner/applicant younger
are, however, some specialty insurers that will allow a
driver as young as 18, so make sure to inquire.
Multiple vehicles. Depending on the coverage provider, a
single liability charge is applied regardless of how many
are in your
collection. After all, you can only drive one car at a
Terms to Know
An auto insurance policy is made up of different coverage and,
while the exact requirements vary from state to state, these
descriptions explain the basic types offered.
Physical damage coverage. Also known as comprehensive and collision,
makes up the majority of a given premium. This is calculated
by the value of the car and its age. In the event of an accident,
your vehicle may be protected by comprehensive and collision
which includes theft and vandalism, as well as physical damage.
Liability coverage. Typically this is relatively inexpensive
and is usually between $30 and $50 regardless of the number
Medical coverage. You and your passengers may be covered
by medical payments coverage, no fault (Personal Injury
uninsured and underinsured motorist protection.
Bodily injury and property damage liability coverage. Damage you may accidentally cause to other people,
and their property.
Towing. Get a policy that includes towing-specifically,
flatbed towing, which makes it far less likely that
vehicle will be damaged.
Selecting a Specialty Provider
As insurance is regulated on a state-by-state basis, premium computations
vary slightly throughout the country. Anyone insuring a collectible
vehicle should research all of the options available before making
a final decision. Rates are a consideration, but should not be
the determining factor. When buying insurance, it's vital to
you are buying service. First look for quality customer service,
excellent claims handling and a knowledgeable staff that understands
collector vehicles. For example, a specialist insurer knows why
the windshield of your '56 Corvette costs $3,000-and knows where
one-as opposed to a standard insurance agency, who figures the
same 'shield should only cost $500 and, unfortunately, will only
to that amount.
Also take into consideration whether the insurance company is skilled
at servicing collector car claims. "A collector car program
should have dedicated claims adjustors who know collector cars,''
says McKeel Hagerty, CEO of Hagerty Insurance. "It's not in
the total loss; it's in the partial loss. It's where the better programs
First and foremost, your policy should be underwritten by an insurance
company certified to doing business by your state insurance department.
Furthermore, the auto policy should be written using policy forms
approved by your state insurance department.