Insuring Antique and Collectible Cars: Preserving its value is paramount

Vintage vehicles are more popular than ever, with a growing number of aficionados dipping their toes into the collectible market both for the sake of nostalgia and as automotive investments. The collectible car market has taken off with renewed vigor in recent years, with interest in classic models – not to mention their transaction prices – rocketing to stratospheric levels.

For example, more than $18 million worth of vintage rides changed hands over a single weekend this past April at the annual Barrett-Jackson Collector Car auction held in Palm Beach. They included a fully restored 1959 Porsche 356A Convertible D that went under the hammer for $148,500, a pristine 1962 Chevrolet Impala SS muscle car that sold for $137,500 and a refurbished 1966 Shelby GT350 that changed hands for $135,000.

These are, of course, extreme examples; as is the case with antiques and collectibles of any kind, exclusivity and condition ultimately determine the market value of a classic car.  Even a modestly kept vintage ride can be worth far more than it did originally, which makes insuring a collectible car quite a bit more complicated than taking out a policy on the average family sedan.

“The most common mistake that classic car owners make when it comes to insuring their classic cars is assuming a standard auto insurance policy will cover its full value,” says Jonathan Klinger, a spokesperson for classic-car insurer Hagerty Insurance in Traverse City, Mich. That’s because standard auto policies are designed for daily driver vehicles that typically depreciate in value over time.

“Classic-car owners need to have either a guaranteed value or agreed-upon value policy that allows them to establish the value up front with no questions when it comes time for a claim,” Klinger says. “Otherwise its up to the owner to bear the burden of proof to fight for the value of his or her vehicle, which can be an unpleasant experience.”

Rates vary according to the value of the vehicle being covered but are reasonably affordable, considering the lower risk involved in insuring a car that’s mostly garaged. For example,  the cost of coverage from American Collectors Insurance for a 1964 Ford Mustang in excellent condition at an estimated value of $14,000, with zero deductibles and no more than 2,000 miles driven annually, would  be $163 a year. Insuring the aforementioned fully restored $137,000 Chevy Impala SS under the same terms would be considerably costlier, however, at an annual rate of $904 a year, according to American Collectors.

While antique and collectible car insurance coverage is similar in many ways to conventional policies offering liability, collision and comprehensive and uninsured or underinsured motorists’ provisions,  depending on the state,  some aspects are genre specific.

For example, a vintage vehicle covered for its full market value can neither be an owner’s commuter car, nor can it be parked on the street. “There must be a ‘regular-use’ vehicle for every driver in the household and the classic car must be kept in a garage when not in use, and not in the driveway or under a cover,” Klinger says.  Some companies restrict the number of miles a classic car can be driven in a given year, which is usually sufficient for modest weekend excursions. Others offer coverage limits that automatically increase by a set percentage each year to help offset anticipated annual appreciation. Similar coverage is usually offered for classic cars currently undergoing reconstruction that concurrently increase in value as the restoration progresses.

Other provisions that may be included or offered at additional rates include coverage for spare parts, tools and related equipment, medical reimbursement for the insured and family members injured while attending a collectible car show and coverage for roadside assistance, towing and travel expenses. Premiums are usually billed on an annual basis.

Reimbursement for claims is typically more flexible than with standard car insurance. One of the advantages of choosing a company that specializes in covering classic autos, Klinger says, is its expertise in dealing with the complex nature of classic car repairs. Owners can typically choose a repair shop of their choice for repairs or simple estimates or can be reimbursed for providing their own labor.  Some companies will send out their own adjusters for larger claims and even help track down precious replacement parts. While some classic cars, such as 1950’s and 1960’s vintage American models, still have original equipment replacement parts readily available, in many cases the parts are no longer produced.  Parts that are used, rebuilt or specially made would be covered to bring the car back to the condition it was in prior to the claim.

In addition to Hagerty, other major insurers specializing in antique and collectible cars include Grundy Insurance, Heacock Classic and American Collectors Insurance.