It’s hard to believe that it’s already September! The leaves will soon start to change color, kids are back to school, and it’s almost time for 50’s fest.
50’s fest is a great annual event in downtown Waynesburg. People from all over bring the classic and collector cars to show off. You can walk up High Street and enjoy all the shined-up vintage vehicles with their hoods open to show off their impressive engines.
Classic cars give us a glimpse of days gone by. For those who own these fascinating bits of history, their classic cars have incredible value. Owners of classic cars love to share their treasure with others and enjoy driving their collector’s item to car shows or occasionally out for a Sunday afternoon drive.
What is a classic car?
For most people, when they think of a classic car they think of an older car like a Model T or a 1962 Chevy Impala. Technically, according to The Classic Car Club of America, a classic car is “‘Fine’ or ‘Distinctive’ automobile. American or foreign built, produced only between 1915 and 1948.”
Insurance companies, however, tend to define a classic car a little differently. Most companies treat any automobile that was produced in 1979 or earlier as a classic car. Insurance companies may also refer to these vehicles as vintage cars or collector’s cars.
In addition to these fancy older automobiles, insurance companies will insure younger limited edition vehicles and exotic cars or supercars (like Lamborghinis) in the same way that they insure classic cars.
Cost of Classic Car Insurance
It may surprise you to find out that classic car insurance costs much less than regular car insurance. The annual rates for a classic car policy generally run between $200 and $600 per year unless your car has a very high value, while regular car insurance usually runs over $1,000 each year.
Why does classic car insurance cost so much less?
Insurance companies expect that you will use your classic car differently from the way you use your everyday vehicle. They expect that you will not drive it as frequently, maintain it with excellence, and drive it with special care. You are far less likely to file a claim on your classic car than your everyday automobile.
How does the insurance company determine the premium amount for a classic car?
Classic cars are insured based on the agreed-upon value of the car. This means that the owner of the vehicle and the insurance company settle on the value of what the car is worth.
For example, let’s say you have a 1930 Ford Model A. You will need to do your due diligence to determine what your car is worth. After doing your research, you determine your car’s value to be $5,000.
Next, you call your insurance agent and tell them the value of your car and provide them with some photographs and information about your car. You will also give them some information about those drivers who will be listed on your policy. Your agent would then call the insurance company with the value you reported.
Most classic car insurance companies are experts on these types of vehicles. This makes settling on an agreed-upon value with them fairly easy. Let’s say the insurance company agrees that your vehicle is worth $5,000. They would then quote your policy to reflect that amount.
Recently, when I wrote a policy for a car with an agreed value of $5,000, the insurance company quoted the premium for the year at only $189.
Besides the value of the car, insurance companies do take into account the age of the drivers on the policy as well as their driving history. These factors will help determine your final premium amount.
Classic Car Insurance vs. Regular Car Insurance
Because your classic car is used differently than your everyday car, there will be some differences in your classic car insurance policy vs. your regular car insurance policy.
Here are the 3 biggest differences in these types of policies.
#1 Your classic car insurance policy will pay the agreed-upon value of the car if you make a claim.
The biggest difference between classic car insurance and regular car insurance is that classic car insurance, as we discussed above, is based on the value of the car. With regular car insurance, the insured vehicle is insured on the actual value of the car. The actual value of the car accounts for depreciation.
Practically it looks like this.
Let’s say you have a classic car that is valued at $40,000. That means that both you, the owner, and the insurance company have agreed that the value of the car is $40,000. Now, let’s say that your car is in an accident and is totaled. Your classic car policy will pay out $40,000 – the agreed-upon value of the car.
Now let’s say that you have a 2018 Ford Mustang that you purchase for $40,000, If this car is in an accident and is totaled, the insurance company would determine the amount you would be paid according to what the vehicle is worth at that time. The insurance company would give you the amount your mustang was worth at the time of loss.
#2 You can change the value of your classic car with the insurance company when you make improvements to your classic car.
When many individuals buy a classic car, it may need a lot of work. In fact, the car may not even be driveable. For many individuals, rebuilding their classic car is one of the best parts of the adventure.
Over time, the owner makes improvements to the car. Maybe they replace worn or broken parts with original parts. Maybe they reupholster the back seat. Maybe they rebuild the engine. Maybe they invest in authentic hubcaps.
Unlike a modern everyday car, when you make improvements to your classic car, your car’s value will increase. Because the value increases you can negotiate a new agreed-upon value for your car on your insurance policy.
#3 You can insure “part” of the car.
Like I mentioned above, many people buy a classic car that needs work. Sometimes they begin with only a frame. The car may not even have an engine. It may have broken axles or have no wheels. Whatever the condition of the car, you are still able to insure the vehicle.
Before a car is fully restored, you can opt to insure the parts of the car that you own without insuring a completely in-tact and functional vehicle. Again, to do this, you must reach an agreed-upon value with the insurance company for what you wish to insure.
Restrictions with Classic Cars
When an insurance company insures your classic car, they assume that this vehicle will receive special treatment. Like any kind of collector’s item, your classic car is something that is given exceptional attention and care.
To ensure that the vehicle is being well-taken care of, classic car insurers have certain limitations or restrictions that they place on the use of the vehicle. Below are the five main restrictions that insurance companies put on classic cars:
When you insure a classic car, only those people listed on the policy are permitted to drive the vehicle. You are not permitted to lend out the car or invite others to drive the vehicle. If someone else is driving the vehicle, your insurance company will not have to honor the policy if your vehicle is damaged.
Storing the car
Just like sports enthusiasts store their collector’s items in glass cases, insurance companies expect that classic car enthusiasts will store their vehicle in a location that will keep it safe from the elements. A classic car insurance policy will require that the car be kept in a garage or a carport.
Time of day
Many insurance companies will limit the time of day that the car can be driven and will state the hours you are permitted to have your classic car on the road.
Miles per year
Most classic car owners only use their vehicles for special occasions – like going to car shows, driving in parades, or attending classic car club activities. These drivers don’t put many miles on their cars each year. Because of the limited use of the vehicle, the insurance company will likely have restrictions on the number of miles you can put on your vehicle every year.
Many classic car insurers will require that you only drive your vehicle to car exhibitions, parades, and other classic car-related activities. Your insurance company will inform you what uses are acceptable for your policy. Some insurance companies, like Hagerty, do allow for the occasional pleasure ride.
What Do I Need to Do to Get My Classic Car Insured?
To get your classic car insured, you need to contact your insurance agent and give them a few details about your vehicle. Depending on the coverages you want and the type of car you will be insuring, your agent will need specific information.
Your agent will also need photographs of your vehicle. If your vehicle has been modified, you will need pictures of the interior, engine, and all four sides of its exterior. If it hasn’t been modified, you will only need photos of the outside of the vehicle and the engine.
Other pertinent information that your agent will need is the model, make, and year of the vehicle, along with the vehicle’s mileage.
Beyond information about the vehicle, your agent will need information about the drivers that will be listed on the policy. Make sure you have the driver’s license number for each driver.
Do You Need Insurance For Your Classic Automobile?
Your classic car is certainly a valuable treasure! Unlike your everyday get-to-work kind of vehicle, a classic car is harder to repair or replace. Making sure that your car is covered according to its value is critical.
At Baily Insurance, we understand how important your classic car is to you. You’ve put time and money into your classic vehicle. And if you are like most classic car owners, you’ve probably invested your own sweat equity into your vehicle.
We know that classic car ownership is not just a hobby – it’s an investment!
At Baily Insurance, we want to provide you with an insurance policy that will cover any damage or loss to your vehicle. We work with outstanding insurance companies that provide insurance for classic cars, collectors cars, and supercars. These companies specialize in the coverage you need.To get started on a quote for your classic car, please give us a call today. We’re looking forward to hearing about your piece of history and seeing photos of your classic car. Let us take care of you today!