The Basics of Collector Car Insurance

For collectors of custom, antique, classic or exotic cars their primary goal is the care and protection of their investment and the first consideration for all serious collectors is the purchase of specialized collector car insurance.  While it is sometimes possible to buy standard car insurance through a regular insurance provider, it’s in the collector’s best interests to take their insurance needs to a specialist.

Because of the uniqueness of a collector car, the insurance company may impose a significant number of restrictions, which may vary from company to company.  In general, they include:

·                     Driver age requirement – the insured driver must be at least 25 to 30 years of age, and must have a clean driving record.

·                     Mileage limitation – collector cars are prohibited from being driven more than a specific number of miles in a given year, typically starting at 2,500 miles.

·                     Storage requirement – collector cars are required to be adequately garaged or stored.

·                     Commercial use restrictions – transportation of goods and/or passengers, or any other commercial purposes is restricted.  Collector cars to be driven only for pleasure and are of short duration; longer excursions are permitted provided the destination is a collector or club event for exhibition of the vehicle.

·                     Additional vehicle requirement – a collector is required to prove ownership of a second vehicle for day-to-day driving use, thus ensuring the collector car is not regularly used.

Certain components of the custom car insurance are similar to those of regular policies, namely, medical coverage, bodily injury, liability, etc.  As regards the property value of the insurance, there are three different types that a custom car collector should be aware of, but in reality, only one of which should be considered.

·                     Agreed Value – An Agreed Value insurance policy is the ultimate in protection for the classic car owner.  The insured and the insurance company agree to a value, which is based on fair market conditions; and the insured pays a premium based on the agreed value.  Changes can be made on an annual basis, by policy endorsement.  This type of policy takes into account the fact that custom cars appreciate, rather than depreciate.

·                     Stated Value – This type of policy permit the policy holder to “state” a value that is generally higher than the “book” value of the vehicle, but which may not be the “actual” value of the custom car, since the insurance company generally only pays “up-to” the stated value, and not beyond it..

·                     Actual Cash Value – This type of policy is not desirable to a custom car collector, and should be avoided.  The insurance company’s adjustor will ultimately make the decision as to the value of the car at the time of the loss; the “book” value of the car is used, which is inappropriate for custom cars, which have appreciating values, rather than depreciating worth.

A collector car may be your most important investment, but collector car insurance should be the second most important.  When you consider the joy you derive from owning a collector car; you don’t want to save a few pennies now, at the risk of losing a lot of dollars if the unimaginable occurs.