Car Insurance: 5 Things You Need to Know About Insuring Your Collectible
Purchasing car insurance for a collectible is different from getting coverage for an everyday driver. Because of that, you should shop insurance for a collectible at a provider specializing in classic and collectible cars. That's not so much because a standard-vehicle insurance carrier can't insure vehicles falling into a specialty class, but standard carriers tend to approach premiums, claims and service in a common-denominator way. Your specialty vehicle -- and consequently your insurance needs -- simply aren't common.
We spoke to an expert at Hagerty, one of the insurance providers specializing in collectible vehicles, about what an owner of a collectible car should know before shopping for insurance. Here are the top five considerations.
1. Who Should Buy Collectible Insurance?
We could wade into the weeds, spending paragraphs on exactly what defines a collectible. For the sake of insurance, however, let's think specialty rather than collectible. A specialty vehicle is one that spends much more time safely tucked away in a parking spot than it does on the road. Think of that vehicle you roll out on a sunny Sunday afternoon to drive to brunch or cruise along the beach.
Specialty, our expert says, is much more about usage than age or rareness. In fact, a specialty vehicle can be brand new, if it's driven sparingly. Which takes us to our second point: usage.
2. How Will Your Collectible Be Used?
Most insurance carriers concentrating on collectible cars have some restrictions on how, as well as how much an insured vehicle will be used. One point of agreement is, it can't be your daily driver. Usually this means that there must be a daily-use vehicle for each licensed driver in a household. Some carriers also set annual mileage limits and other rules.
We'll lump storage with usage. Even traditional insurance providers recognize that parking a daily-use vehicle in a garage poses less risk than parking it under a streetlight in front of your house. Where you regularly park your everyday driver will affect your premium. Likewise with insuring a collectible, except in this instance, the insurance company will insist you park your collectible in a safe environment when not in use.
3. What's It Worth, Really?
Both parties (the insurance carrier and the owner) must agree at the time the insurance is purchased on the value of the vehicle. This value can be adjusted over time, but a clear, agreed-upon value must be established. Car insurance in general is based on valuing a vehicle in one of three ways.
- Guaranteed Value: Whatever the agreed-upon value is when the policy is purchased is what the insurance company will pay if the vehicle is declared a complete loss.
- Stated Value: This is an agreed-upon value at the time of purchase, but in the case of a total loss, the insurance provider can deduct depreciation before paying the settlement.
- Cash Value: This is typical of standard insurance policies on most cars. Insurance providers calculate the current average transaction value of similar cars as the basis for paying a complete-loss settlement.
To avoid a lot of hassle and additional pain in the instance of a complete loss, only purchase a guaranteed-value policy for your collectible.
4. Is It a 12-Month Premium?
Carriers specializing in covering collectibles recognize there are periods of the year when an insured car probably won't be driven. In the snow belt, for example, collectibles will remain parked for 3, 4 or 5 months of winter. Collectible-car insurance providers factor in such downtimes typical to specific areas of the country when computing annual premiums. Otherwise, owners must contact their insurance provider to start and stop coverage over longer periods when the car won't be used.
5. Who Handles Claims?
The must-ask question when securing coverage for your collectible is who will handle a claim. If the worst happens and your collectible (particularly an older one) is damaged, will the claim be handled by someone who is familiar with collector cars and the specialized needs for parts and expert repair? Or will a claim be handled by an adjuster trained to send cars to the closest collision center and only approve the lowest-cost aftermarket parts?
Asking this question will minimize the hassle of fighting to have repairs done properly by someone experienced in dealing with classic and collectible cars.
What it means to you: To own a collectible car requires agonizing over exactly what you want then going through the process of locating and finally purchasing it. It only makes sense to put similar effort into getting exactly the right insurance.