Whether you own a 1994 Ford Mustang SVT Cobra, 1966 Ferrari 330 GTC, 1941 Willys Americar hot rod, original Model T from 1923, or other coveted collector car, you probably want to do everything you can to protect your investment and ensure many years of fun and enjoyment with your prized vehicle. That means keeping it clean, well-maintained and sheltered, as well as making sure you have the right automobile insurance coverage in place. Because when it comes to a classic car, truck, motorcycle, or other rare and vintage vehicle, traditional automobile insurance can’t keep pace with these street kings, the values they command or the TLC they require.
With conventional automobile insurance, your car is typically covered only up to its actual cash value, which is equivalent to its replacement cost minus depreciation. For example, if you purchased a brand-new Dodge Challenger in 2010 for $22,000 but got in an accident that totaled the car today, your insurance company may only reimburse you an actual cash value of approximately $14,000.
By contrast, classic auto insurance usually covers your collectible vehicle for an agreed (often called “guaranteed”) value that is mutually agreeable to you and the insurance company – an amount the automobile is worth based on respected collectible car valuation guides like the Old Cars Report Price Guide, an appraisal by a professional, research conducted by the underwriter, or some form of documentation. For instance, if you own a 1957 Chevrolet Bel Air with an 8-cylinder engine and 162 horsepower, Hagerty, a leading insurer of collectible cars, would value that at about $61,000. If you have a collectible car insurance policy in place and that vehicle suffers a total loss, the insurer will compensate you the full $61,000.
By their very nature, collectible cars generally increase in value, especially if they are well cared for and/or restored. Everyday automobiles that we drive to work, schools, stores and our favorite destinations, on the other hand, usually lose value over time and don’t require agreed value-type coverage.
While most collectible automobile insurance policies are relatively similar, the way carriers classify different types of collectible vehicles, including some types they exclude coverage for, is important to understand. Although definitions, years and descriptions can vary from insurer to insurer and state to state, the most common collectible auto categories are below. We generally will use classic and collector car insurance interchangeably for the purposes of simplicity.
- Classic Car Insurance: defined by many companies as being 19 to 24 years old, restored, in good working condition, and greater than the average value of other autos of the same make and model year; some insurers consider a car of this description that is only greater than 10 years old to be “classic.” The Classic Car Club of America regards classic vehicles to be those manufactured between 1925 and 1948.
- Antique Car Insurance: defined by many companies as being at least 25 years old and in good working original or original restored condition. In some states, an “antique” car only needs to be at least 20 years old, while the Antique Automobile Club of America regards a car that is at least 45 years old to be antique.
- Modified Car Insurance: defined by many companies as being significantly altered in its engine, body, chassis or interior from its original condition, which can negatively or positively change the value; many insurers will not provide collectible coverage for these types of vehicles (for example, an antique car in which much of the stock equipment has been replaced or that runs on nitro fuel).
- Kit cars and replicas: defined as representation automobiles that are at least 24 years old with separate manufactured components, or that represent the assembled reproductions of any motor vehicle at least 25 years old.
- Other subcategories within these four main categories include:
- Street rods/hot rods made before 1949 and that have been modified
- Vintage automobiles manufactured between 1919 and 1930 that may or may not have been modified
- Veteran vehicles made before 1919
- Rare motorsport vehicles, vintage military vehicles, classic motorcycles, antique tractors and modern limited production models.
Automobiles on the periphery that commonly do not qualify for collectible car insurance include “exotics” – cars that are under 15 years old but that have the potential to increase in value; and “old” cars, which are considered simply long in the tooth and not classic, antique, vintage or veteran.
Insurance for a collectible automobile works much like traditional automobile insurance. The policy typically has a term of 12 months and includes coverage for liability, collision, comprehensive, medical payments, and uninsured/underinsured motorists. State-mandated liability coverages extend to collectible cars as well as regular private-passenger vehicles. In terms of optional coverage, apart from the standard ones such as collision and comprehensive, there are also some options unique to classic cars. Examples of options offered by most classic car insurers are:
- Roadside Assistance: including towing only with a flatbed tow truck to prevent wear and tear while transporting to a repair shop or back home
- Traveling Coverage: which can reimburse for food, lodging, a rental vehicle, and personal items if your vehicle breaks down
- Auto Show Medical Reimbursement: in case someone sustains an injury at an exhibit or event featuring your car. This coverage is not unlike the medical payments on a homeowners insurance policy, where the policy will pay medical expenses to the limit, regardless of fault. For example, if someone slips and falls in your exhibition space, this optional coverage would protect you.
- No Attendance Required: which provides coverage while you are away from your vehicle as it is being displayed at a car show. The vehicle does not to be in your care, custody, or control in order for coverage to apply. For example, if you let a dealership utilize your vehicle in an event, you would be covered.
- Coverage for spare parts: If you have backup parts on hand, such as a water pump, this add-on would provide coverage for those parts at the agreed value if they were stolen or destroyed.
Lastly, note that you can choose to increase your coverage and negotiate the agreed value if you estimate that your collectible vehicle’s worth has risen, especially if you have recently restored the car and want to protect what you have invested in it.
Insurance companies require that a collectible car not be used as a primary driving vehicle. They also place maximum annual mileage restrictions on its use, the ceiling for which will depend on your state but usually not exceed 7,500 miles per year. Most classic vehicle policyholders are limited to using the automobile only for pleasure driving or a hobby activity, such as participating in a parade, show or exhibition. Many insurers will not cover a claim if you use the classic auto to drive to work, shops, or other destinations.
In addition, many carriers will not provide coverage unless you:
- Are at least 25 years old
- Have a good driving record and at least five to 10 years of experience driving
- Have no more than one at-fault accident or moving violation within the previous three years
- Safeguard your vehicle from the elements by keeping it parked in a secure and fully enclosed garage, carport, storage facility or other approved structure
- Own and use another vehicle as your primary automobile driven regularly to and from work, school and other frequent destinations
- Live in a certain state or area (some carriers only operate in certain states)
- Agree not to race your classic car or drive it on a race track
- Own a collectible that is in good shape and intended for normal driving.
“Insurers may decline to cover vehicles that are in poor condition, have been previously damaged or that are designed for off-road use,” says Loretta Worters, Vice President of the Insurance Information Institute in New York City.
Coverage for collectible vehicles is almost always less expensive than conventional automobile insurance, due to the fact that you drive much fewer miles every year and you are likely to keep the vehicle sheltered and in good condition. Nevertheless, the way premiums are calculated are still based on similar factors as common auto insurance.
“Collector car insurance is generally very affordable, possibly costing around one third of what you might pay for regular auto insurance,” says Kristofer Kirchen, president of Tampa, Fla.-based Advanced Insurance Managers, LLC.
Similarly, car insurance discounts available to standard auto policies also apply to collectible car insurance, and varying by the insurer. Some circumstances that may allow you to be qualified for a discount include:
- Have multiple policies with the same carrier.
- Insure more than one classic vehicle.
- Have a clean driving record with no accidents or claims within the past few years.
- Equip your vehicle with an antitheft device.
- Complete a defensive driver class.
- Select a comprehensive-only policy, which is ideal for owners who plan on only restoring and not driving their automobile.
Many well-known insurers – including State Farm, Progressive, Farmers, Safeco, GEICO, and Esurance – as well as specialty carriers (many of which underwrite for the aforementioned companies) like Hagerty, J.C. Taylor, Condon Skelly, Grundy, and American National, offer coverage for collectible vehicles. A good place to start your search for the right provider is with your existing auto insurance carrier, who may be able to kick in a discount for insuring multiple vehicles.
“When you go through your existing agent, you also avoid the problem of one agent not knowing what the other is doing. For instance, one agent may delete a daily driver or decrease the limits of liability, while the other does not know about the change,” Kirchen says.
But don’t stop there – shop around and call several different carriers to compare rates and coverages, say the experts.
To ensure that you secure the right coverage for your needs, at the right price, follow these money-saving and hassle-preventing suggestions:
- Prepare to substantiate the current value of your collectible vehicle. This means taking photographs, consulting industry price resources like the Kelley Blue Book, and possibly getting the car professionally appraised. Determining an accurate worth can prevent you from being short-changed if you suffer a total loss.
- Choose an agent and a carrier that is experienced in and specializes in classic car insurance.
- Opt for a company that has an in-house claims department, which may ensure an easier and more satisfactory experience if you ever have to file a claim.
- Pay attention to the fine print. Understand exactly what is covered and what is restricted. Ask your agent about anything you don’t understand.
- Review any limited use provisions. “The limited use provision of a classic car policy allows for travel to car shows and auto club meet ups,” says Worters. “However, this coverage may be restricted by some insurers. Before choosing an insurer, check to see if they have travel restrictions.”
- Ask if your carrier is okay with your repair shop. “Some companies give you the flexibility to bring your collectible car to a specialized repair or restoration shop of your choice,” Worters adds.
- Don’t let your coverage lapse. Just because your classic auto is safely nestled inside your garage doesn’t mean your car couldn’t be damaged from a hurricane, fire or other disaster.
- Review your coverage at least annually, “as values can change drastically from year-to-year,” says Kirchen.