How to insure a classic car

Linda Melone

You may take your little red Corvette out for a spin on weekends and occasionally show it off at car shows, but your Vette still requires car insurance coverage. Getting that coverage can seem almost as complicated as finding a replacement part for your classic car.

Classic cars are fun vehicles you own because you want them, not because you need them for going to the office or the grocery store, says Jonathan Klinger, a spokesman for Hagerty, the country's largest provider of insurance for classic cars.

Typically, cars 25 years and older are referred to as classic, antique or vintage, Klinger says. For people other than purists, the terms are interchangeable, Klinger says. Other factors for defining "classic" status are the collectability of a car along with how it's used.

Problem is, collision and comprehensive claims on a standard car insurance policy value the vehicle according to what the company considers its depreciated value. That can leave you on the hook for thousands of dollars in repairs if you get into an accident with your classic car. A $3,000 claim won't cover you if your car is valued at $500, which could be the case if the value of your classic car drops.

Classic car insurance options

A guaranteed value (GV) policy, also called an agreed value policy, works best for insuring classic cars, Klinger says. Why? Because this type of policy doesn't depreciate the value of a classic car. Plus, it offers three key types of car insurance coverage: liability, which is mandatory in nearly every state, as well as collision and comprehensive, which are optional.

Barry Wolk of Farmington Hills, Mich., learned all of this firsthand.

When Wolk's hitch failed on his new custom car hauler and it smashed into a guardrail, he was relieved no one was hurt, but his vintage 1955 Porsche Continental Cabrio inside the trailer was badly damaged.

"The trailer had just been insured (by Hagerty) for only two days; we hadn't even paid our premium yet," Wolk says.

The settlement on the trailer went smoothly. The many out-of-sight damaged parts and the discontinued 16-inch wheels, however, presented more of a challenge. Replacement parts were covered under his policy, along with additional transmission work linked to the accident.

Wolk says that by having a GV policy, he didn't have to worry about depreciation of his Porsche if it was a total loss.

With a standard car insurance policy, the insurer assesses the current market value of the car at the time of the loss and pays only what the company decides the car is worth -- often much less than what you originally paid for the vehicle.

With a GV policy, you and your insurance provider agree on a value for the duration of the policy. In the event of a total loss, you'll receive a check for the total guaranteed value.

For example, if you have a 1966 Mustang insured for a GV of $35,000 and the car is declared a total loss, the owner receives a check from the insurance company for $35,000 -- with no questions asked and without any depreciation.

You can change the GV amount if the value of your car fluctuates, Klinger says. "Typically, most people evaluate the GV amount their car is insured for at the time of renewal," he says, "but there are no limits as to how many times you can adjust that during the policy period."

The agreed-upon value of the vehicle largely determines your car insurance premiums. The age of the car and your state of residence figure into the price as well. Given all that, though, you can expect to "pay approximately half of a standard car insurance policy for vintage car insurance," Klinger says.

For example, coverage for a:

• 1941 Chrysler Windsor with a GV of $15,000 will cost an estimated $179 a year. • 1966 Ford Mustang with a GV of $35,000 will cost an estimated $332 a year. • 1957 Chevrolet Bel Air Convertible with a GV of $50,000 will cost an estimated $421 a year.

Rules of the road

Some car insurance companies dictate how you drive or how much drive in your classic car.

For example, some insurers limit classic car use to exhibitions, car club gatherings, parades and similar functions. Restrictions and requirements vary from insurer to insurer, says Roger Redden, a Farmers Insurance agent in California.

Also, most insurers require that the car be stored in an enclosed and locked place when not in use, not outside in your driveway or under a carport -- exposed to weather and potential theft.

To insure your vintage car, you'll need to supply supporting documents, including two photos -- one of the vehicle and another of the garage or other building where it's stored.

You'll also need a copy of the declarations page from you’re the insurance policy for your everyday car. This proves that every driver in the house has access to a regular vehicle other than the classic car, Klinger says.

"You don't want your 1969 Camaro to end up being used as the backup vehicle if everyone in the house needs to go somewhere separately," Klinger says.

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