Best Insurance for Classic cars
by: McKeel Hagerty
As Of: 16 Dec. 99
This page is here because I ask a friend at the Hagerty Insurance Company to provide either an article about Collector Car Insurance or to build an FAQ related to that subject. I had ask my friend at Hagerty because I have had all of my Classic, Collectable and Special Interest automobiles insured by them for the past eight or ten years.
I hope the following will answer many of your questions related to this subject. I also encourage you to follow up by giving the people at Hagerty Classic Insurance a call, if you would like more information. They have always been most friendly, knowledgeable and helpfull to me. I'm sure you will be treated in the same manor.
I hope this is of benefit to you,
Carl Beck, President
Internet Z Car Club
Throughout its fifteen-year existence, the people at Hagerty Classic Insurance have answered these questions from hobbyists and collectors on a variety of topics associated with collector car insurance. McKeel Hagerty, President of Hagerty Classic Insurance, has categorized the most common and important questions and provided informative and helpful answers.
"We want the car collector and general hobbyist alike to know the realities associated with owning and protecting collector vehicles", comments Hagerty, a leading expert on specialty auto insurance. "Because there are significant differences between specialty and standard insurance programs, we want to provide people with the correct information that will dispel any misconceptions they may have as well as save them a lot of money. "
How are most collector cars insured? Less than half of the collector vehicles on the road today are insured by specialty programs. Although, collector car insurance has been available for five decades, most owners of collectibles, specialty cars and street rods are still insuring them through a standard insurance company despite the higher cost and often more restrictive policies.
Are specialty insurance program premiums less than standard insurance premiums? Yes. Standard insurance annual premiums can cost up to 500% more than those offered by a specialty program. Although standard companies provide adequate coverage for the "daily driver", they rarely offer the added benefits associated with collector car programs. One example is that a stock vehicle, valued at $10, 000, can be covered by Hagerty Classic Insurance for as little as $90-95 per year.
What is the difference between insurance specialty programs for collector vehicles? Although there are several fine specialty programs, there are differences among them. Levels of service, rates, types of coverage and claims handling all vary from program to program. Anyone insuring a collectible should research all programs before making a final decision. Varying costs should be considered, of course, but should not be the determining factor. REMEMBER when buying insurance you are buying "service" so first look for quality customer service, excellent claims handling, knowledgeable staff who know and understand collector vehicles, and an overall impression that they care about you as a customer.
What are the different kinds of insurance coverage? There are three types of automobile insurance offered today: Actual Cash Value (ACV), Stated Value, and Agreed Value. ACV coverage is what insures most everyday cars and pays out a depreciated "book" value in the event of a claim: the older a car is on an ACV policy, the less value it has. Some insurance companies offer Stated Value policies for collectibles. These policies are better than ACV because they allow you to "state" a value for your vehicle greater than its depreciated "book" value. But, Stated Value can still depreciate vehicles because the policies generally require the insurance company only to pay "up to" the "stated" amount. Only Agreed Value insurance policies guarantee you will get all of your money back in the event of a total loss. There is no depreciation of a car's value with an Agreed Value policy. This is why Hagerty offers only Agreed Value coverage to its customers.
What kinds of vehicles are collectible? This is a difficult question to answer briefly because the market is broadening so rapidly. It's not just Ford Model As, 57 Chevys and Packards anymore. Now, Hot Rods, muscle cars, vintage pickups, vintage racers, sports cars and even 70's cars are being collected. The old categories of "antique and classic" are still there for the purists, but today people are collecting more and different cars than they used to. Yes, even AMC Pacers are finding a niche within the hobby, especially if they have the Mojave stitched interior option!
Do specialty insurance programs have a vehicle age cutoff? While the old standard used to be 25 years and older, it is always best to inquire on a per-vehicle basis. We take a much broader view about the age of the vehicles we will insure. There are new cars that are insurable as collector cars. These tend to be exotics and sports cars, however.
Is there specialty insurance for street rods and customs? Yes. We feel that rods and customs are a very important part of American automotive history. And we're thrilled to insure them. But because the very nature of these cars is that each is unique, there are some differences in how they are insured. The difficulty is in determining their value. You can't just look in a value guide to see how much they are worth. So we dig a little deeper into the mechanical and aesthetic modifications made to the car, its horsepower, suspension system, paint scheme, etc. It doesn't take long to determine a value based upon the base value of the car to begin with, then the parts and labor that were added. Quality of the parts and workmanship are important factors. And in some cases there is a premium put on cars that were "built" by well known or famous builders.
I have an exotic. Can I get specialty insurance coverage? Yes. We insure even brand new exotic and sports cars. Among these, we tend to look for rare vehicles that will be used as a collector car rather than a daily driver; this indicates that the car will be kept in good shape and thus that the value will be maintained.
Do collector car programs impose mile restrictions? Many specialty programs strictly limit owners to driving their collector vehicles to 2, 500 miles per year. They may even require annual odometer readings. Hagerty Classic Insurance offers flexible usage guidelines. This means that if a person has regular cars that are driven daily and their collector cars are used on a limited basis consistent with owning a valuable vehicle, then we do not strictly limit the mileage they may drive.
Am I limited to driving my collectible only in parades or shows? What if I want to take a Sunday cruise? Enthusiasts like to share their collector cars with the public but they also just enjoy driving them around. While some programs require that collector cars are only to be driven in activities of public interest, we also allow for and encourage the private enjoyment of collector cars. Go ahead and take that Sunday drive. Nevertheless, collectors should consider these types of restrictions and find a policy with flexible usage guidelines that best suits their overall needs.
Are there other usage limitations? Yes. Most specialty insurance programs, including Hagerty-do not allow vehicles to be used for the commercial transportation of goods or passengers, for racing, or for daily transportation.