Classic Car Insurance - FAQ

Q. I have a classic/exotic car that doesn't get driven that much and my normal car insurance company won't insure it for it's value, what type of car insurance is available for classic, exotic or limited use autos and what other things should I be aware of when it comes to insuring my classic car?

A. If you own a collectible car (classic or exotic) that is driven only occasionally for pleasure drives, club events, etc. and is driven less than a
couple thousand miles a year, you could qualify for "Collectible Car Insurance". However, if you are interested in information on car insurance for your daily driver please see our FAQ on auto insurance.

Insuring these cars under a standard insurance policy could cause problems if you should ever have a claim. Claims adjusters from most insurance companies are not equipped to deal with the special needs of the collectible car and its owner - needs such as using the repair shop of your choice or using original parts. Regular insurance policies also usually will not guarantee a specific value for your car at the time of a claim. Your classic car insurance should be chosen as carefully as the parts you use on your car.

Specialty car insurance agencies are out there to provide for the needs of the collectible or classic car owner. Premiums at agencies that specialize in collectible vehicles are usually much smaller than the cost of a standard insurance policy. Guidelines may include restrictions on mileage and usage, garaging for the car, a good driving record, an available primary car and restrictions on young drivers. Coverage can also be found that will cover special towing and parts.

Insurance policies come in three main forms: Actual Cash Value, Stated Value and Agreed Value. It is important to understand each of these before you choose a policy.

An Agreed Value policy is recommended because the value of your car will usually be greater than the "blue book" value and will probably grow over time - under an Agreed Value policy, if your car is damaged beyond repair, you will receive the value listed, in writing, on your policy. Most "regular" insurance companies don't offer this type of policy.

Actual Cash Value Policy - This is the type of policy that you probably have on your daily driver. With this type of policy, a claims adjuster decides what your car is worth at the time of the accident and that is the amount that you will receive. In most cases, the claims adjuster has the final word unless you choose to take some sort of legal action - which is often regulated by your policy.

Stated Value Policy - This is often used on collector car policies and is typically represented as being the same as an Agreed Value policy but BEWARE! It is not the same! With Stated Value, the insurance company pays the lesser of: the stated value; the cost to repair the auto not exceeding the stated value; or the actual cash value of the car (more often than not this is considerably less than it would cost to replace your classic car). Premium cost is decided based upon the stated value. A settlement amount that is equal to the value of the car is not guaranteed - remember, this type of policy pays the LESSER of the listed amounts.

Agreed Value Policy - This is the only policy that guarantees in writing the exact amount you will receive if your "Collector Car" is stolen or totaled while the policy is in effect. An Agreed Value policy states that you will be paid the lesser of: the agreed value; or the cost to repair the vehicle not exceeding the agreed value. The agreed value should be carefully reviewed and must be agreed upon by you and your agent before the policy is issued. The amount should represent the market value of your classic car at the time of the policy. If the value changes during the policy period, the agreed value can usually be changed, it should also be reviewed and changed as needed with each policy renewal.

Tips on Selecting a Classic Car Insurance Policy:
Some insurers will allow you to insure special items that you have added to your car.

Most only allow you to drive around 2,500 miles a year, but it is possible to find allowed mileage up to 5,000 miles a year. Some have restrictions that only allow you to drive the car to special events. Different deductibles are also available.

Be sure to read the application carefully. Ask about warranties and restrictions before you apply. Find a policy that suits your needs.

Most claims on your policy will require you to take your car to a shop for repairs. Find out if your insurance company will allow you to have your car repaired at a shop of your choice and if they will allow the use of more expensive original parts if they are available.

Many collector car insurance companies require you to have at least one other car in your name for daily use.

Make sure the coverage limits for both liability and uninsured/underinsured motorists coverage's provided by the auto policy covering your everyday car match the coverage limits provided by your "Collector Car" policy.

Some insurance agents will tell you not to obtain a separate collector car policy because their auto policy will not allow it. This is misleading and simply not true. There are two provisions these policies may require of a collector car policy: the limits of liability coverage provided by the "Collector Car" policy must be the same or higher than those provided by the everyday auto policy; and the insurance company issuing the policy must be "A" rated.

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