How Insuring an Old Car Differs from Insuring Your Daily Driver

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From the November 2016 issue

Insurance is the root canal of automotive enthusiasm. It’s fine print, inscrutable terms, disaster scenarios, and just-tell-me-where-to-send-the-damned-check resignation. It gets more obscure when insuring collectible cars.

“An auto policy is an auto policy,” explains Jonathan Klinger, public-relations manager for Hagerty Insurance. “The difference between a regular auto policy and a collector policy is how it treats the value of the vehicle.” For most of the 260 million or so cars on America’s roads, that value is set according to relatively straightforward depreciation schedules.

But about 18 million to 20 million cars in the United States (Hagerty’s guess; the company says it insures about 1.2 million of them) qualify ­generally as custom, collectible, antique, or classic cars. They’re normally not used every day, they’re driven few miles every year, and their true value usually has nothing to do with depreciation. Classic-car insurance policies are typically based on an “agreed value” assessment of a car’s worth. For restored or preserved classics, that’s usually based on sales and auction results. Most of the time, Klinger says, an appraisal isn’t necessary. But one can be used in determining a specialty vehicle’s value or in resolving a disagreement. Hot rods, for example, tend to reflect the initial builder’s taste and personality, which doesn’t always translate into widespread desire in the market. Those cases may involve more negotiations on value based on the effort and money sunk into the car.

The largest populations of collector-car owners are in these five states:
1. California
2. Michigan
3. New York
4. Florida
5. Texas

These are the 10 most common collector models:
1. Chevrolet Corvette
2. Ford Mustang
3. Chevrolet Camaro
4. Chevrolet Bel Air
5. Ford Model A
6. Ford Thunderbird
7. Volkswagen Beetle
8. Chevrolet C10 pickup
9. Chevrolet Impala
10. Chevrolet Chevelle

Limited-use insurance for collectible cars is available from specialists such as Hagerty and Grundy, as well as national players like State Farm. There’s no specific mileage limitation in most cases, but piling on 15,000 commuter miles in a year might result in some policy changes. And if you get into a fender bender at Home Depot while your Ferrari 275 GTB/4 is overloaded with lumber and house paint, your insurer may suspect that you’re not treating the car like a cherished icon.

Many common collector-car claims originate in the garage. Specialty insurers are used to dealing with cases such as carburetor fires, plummeting boxes, or a car that falls off its jack stands. But the big advantage of collector-car insurance is cost. According to Klinger, collector policies only generate around one-tenth the number of claims of standard insurance. Fewer claims usually translate into lower prices. Tammy Dobrotin, a State Farm agent in collector-rich Santa Barbara, ­California, explains that while many individual variables go into calculating pre­miums, a $20,000 collectible in her area may be insured for as little as $90 every six months. A regular-use policy on a similarly valuable daily driver may run four to five times that. So, while your agent will always be happy to tell you where to send the damned check, at least the check will be a little smaller.

Lincoln’s Lincoln

Big-ticket cars—from the mid-six-figure range on up—are practically impossible to total. As long as the vehicle’s identification plate can be salvaged, the car can be rebuilt around it. Specialty insurers are used to dealing with such claims and accommodating repairs that may require expertise unavailable at the local Maaco. They also may be more understanding when an owner makes a total-loss claim but wants to retain the wreckage.

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