To you, it's a 1990 Alfa Romeo driven only on weekends. To many auto insurers, it's a gremlin-ridden heap worth so little that it's not worth repairing.
You can hardly go without coverage, but more traditional car insurance policies won't value your cherished but older car the way you do. It's a predicament every car lover faces.
You have several choices to insure a keepsake or classic car:
- The state-mandated required liability coverage. But the chances are, if you have the money to shelter a classic or collector car, you're probably risking not only your car but your financial assets if you choose a bare-bones policy. And your car, if you wreck it, will be your own problem.
- A regular-use policy, the same as your other cars. The problem is that any collision and comprehensive claims will value the car according to its depreciated, actual cash value. Your car, if you wreck it, is covered at its value the day before the accident. If the market for 1990 Alfa Romeos shows that they're worth $500, your insurer won't want to pay $3,000 to repair it.
- A stated-value policy. The owner decides the value of the car. Usually these policies include a provision that allows an insurer to pay out actual cash value instead, if that amount is less. With stated value, you're buying only as much coverage as you can afford, rather than covering the true worth of the car. That's useful if you own, say, a Ferrari 250 GTO worth $2 million but can only afford to insure it for $1 million.
- An agreed-value policy. Your insurer and you agree on the car's value ahead of time, and that's what you're paid if it's totaled.
Special insurance for special cars.
There are many variations on the above, of course, and the good news is that specialized policies are typically cheap. Collector cars don't rack up a lot of miles.
Because coverage is relatively inexpensive – often only a couple of hundred dollars a year – your decision should be based on how your claim will be handled if your car is totaled.
"The most important advice we can give is to make sure your insurance carrier offers a guaranteed or agreed-value policy," says McKeel Hagerty, CEO of Hagerty Insurance, the biggest insurer of classic cars. An agreed-value policy should allow you to put a price on restoration, major modifications or sentimental value that allows the possibility of repair.
You'll usually need photographs of all sides of your car and its interior, and perhaps of where it's garaged. Some insurers may require an appraisal beforehand. The biggest players in the specialty market -- Hagerty, Leland West and Grundy -- don't. (All three offer online auto insurance quotes, as well.)
5 tips for insuring your classic.
- Get a quote from a specialty insurer as well as from a traditional full-line insurer. The premiums can be much lower, but typically you will need to maintain full coverage on your daily driver elsewhere.
- Look for a policy with agreed-value coverage. If you've put a ton of money into making a car like new again, agreed value is the only way you'll get your money back.
- Beware of conditions. Some policies might come with very low mileage limits, such as 2,000 miles a year. If you travel to car shows or away for long weekends, that might not be enough. And check to see if there are any limits on who can drive the car.
- How will claims be handled? Will you be able to use the body shop you want for repairs? Are your spare parts and custom paint job covered?
- Consider temporary insurance. Many carriers allow you to insure rarely driven cars on an as-needed basis. Alert them beforehand when you'll be driving it, and you'll pay only for those days.