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Insurance

By Jeff Zurschmeide

By the time your restoration is complete, you are likely to have invested tens of thousands of dollars in your project, and most if not all of that value will be present in your car. Your restored car is likely to be treated gently and you want to keep it looking nice, so your car is actually safer than most daily driving cars on the road. It is also possible that your car is unique and irreplaceable. Therefore, it makes sense to completely insure your restored collector car with a special insurance policy designed for your needs.

Because the hobby is tremendously popular, specialty insurance companies exist for the sole purpose of covering classic, restored, and otherwise collectible automobiles. Thatís good news, because your regular auto insurance is not designed for a collector car, and will not cover your investment adequately.

Most normal auto insurance policies assume that a car is driven every day, to and from work, to the grocery store, and under all weather conditions. Does that describe your classic car? Probably not.

Because of those assumptions, auto insurance is priced based on the perils faced by a daily-driven automobile. There is also an assumption built into a standard insurance policy that any given car is worth less today than it was yesterday, and will depreciate again tomorrow. Does that describe your classic car? Again, probably not.

Because of the unique nature of restored and collectible cars, it makes sense to have an insurance policy that is tailored to their actual use. Think about it - most restored cars are driven carefully, never left outdoors for long, and rarely driven during inclement weather. When theyíre garaged, theyíre usually in a safe, locked place. And car thieves donít generally want to steal your classic - they want a new Honda or BMW that they can pull apart and sell easily.

So a collector car needs to be insured based on its real market value, or the investment youíve made in it, and not a depreciation table based on its age. And while a collector car needs liability insurance as all cars do, insurers can cover the car with the understanding that the likelihood of an accident is substantially lower.

That all leads to good news for the collector: this kind of insurance is actually substantially less expensive than general car insurance, because the risks are that much lower. Companies such as Hagerty, Grundy, American Collectors, and J.C. Taylor provide specialty insurance policies for classic, restored, and custom cars. These policies vary, so be sure to check the details before you buy, but in general hereís what youíll find:

  • Your collector car must generally be at least 15 or 25 years old, and there is often a minimum value
  • You may not qualify for collector car insurance if your driving record is poor
  • You must have a daily driver as well as your collector car
  • You must have a locked garage for your collector car
  • You and the insurer will agree on a value for your car, and this value will be revisited each year when you renew your policy
  • You can drive your car for enjoyment and to events, but not as a daily driver
  • You are not covered if you race your car or drive it on race tracks
  • The insurance companies will require photographs and documentation of your carís provenance and condition before issuing a policy

Ask your local collector car community which insurers they prefer. Then shop the recommended companies and choose one that best suits your needs and your budget.

Dos and Don'ts
Thumb up  DO
  • Insure only with a reputable company. Ask around your collector car community for references
  • Fully document the history, condition, and value of your collector car
  • Choose an ďAgreed ValueĒ policy
  • Protect your insured car with a locked garage, at the very least

Thumb down  DON’T
  • Donít disclose the location of your garage publicly
  • Donít leave your garage open longer than necessary with your car in view
  • Donít rely on a standard automotive policy to cover loss or damage to your collector car
  • Donít take your collector car to track days or racing events without understanding the impact of such events on your coverage
The Popular Restorations Project Car
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1946 Packard: Insurance

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A couple of years ago I was taking a tour of Custom Automotive Restoration (CAR) and the owner showed me a 1950s T-Bird that had gotten in an accident. The car was insured with Hagerty and the Hagerty agent had been out to the shop and asked for an estimate. CAR told him they wouldnít know until they got the fender down to bare metal because it would cost substantially more if the fender was full of putty or had hidden rust. The insurance agent didnít argue and was fine with that. I was impressed so for the Popular Restorations project car I signed up with Hagerty. To be fair, all of the top name collector car insurance agencies have excellent reputations for handling accident claims. Depending on you, your car, and your location, one agency may charge more than another so shop around before making a decision.

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Comments
Interview
 

Grundy Insurance

By Jeff Zurschmeide


Chuck Wasoski
Underwriting Manager

www.grundy.com

PR: How is collector car insurance different from standard car insurance?

CW: A regular auto policy is based on Actual Cash Value, so youíre not going to get the true value of your collector vehicle. A collector car policy should be based on Agreed Value. Everything else is the same as a regular auto policy, except that itís a limited use policy. The liability, medical coverage, and the uninsured motorist coverage are all the same, because thatís all limited by the states.

PR: Can you explain the difference between Actual Cash Value, Stated Value, and Agreed Value policies?

CW: Thereís a big difference. The only kind of coverage you should have is Agreed Value. That means that when the policy is written, the value of the vehicle is already determined, so if thereís a total loss, thatís the amount of money you will receive. Regular auto insurance is based on Actual Cash Value, which declines over time. Under a Stated Value policy, you have to supply documentation to support the value on the date of loss. Plus the insurance company will have to do research on the value, so if you have $50,000 into your car, but you canít come up with the paperwork to prove that value, the insurance company may come back and say they think itís worth $25,000. An Agreed Value policy guarantees the value of your car. Thatís the key thing. When people are ready to purchase collector vehicle insurance, thatís what they have to look for, that the company provides an Agreed Value policy. If you donít have an Agreed Value policy, you could be throwing away your payments.

PR: What kinds of cars are eligible for collector insurance?

CW: With some companies, the vehicle has to be 15 or 25 years old, or older. But at our company, we donít have an age limit in most states. Weíll insure newer exotic vehicles, but we wonít insure a mom-and-pop car for going to the store. It has to have some kind of collector status.

PR: What is the process to obtain this insurance?

CW: Itís pretty simple. We ask for an application, which we send out. The customer fills it out and mails it back to us with the state forms, the completed application, a couple good pictures of the vehicle, and a check. Then it goes through an underwriting process, and if everything is approved, we write the policy the same day.

PR: Are there collector cars you will not insure?

CW: I have cars insured for $10 million, but there are some companies out there that have limits on value. If they couldnít write it, the customer would have to go through another company or get reinsurance. We have a minimum value of $5,000, but if a collector has an existing policy with us and buys a less valuable car to restore, we would insure it as an accommodation. Because when itís restored, it is likely to be worth more. We insure vehicles in the process of restoration, because in todayís world, you have cars that people will purchase for $25,000, but when the restoration is done the car will be worth $150,000. You still have a $25,000 investment at the beginning, and thatís what you want to insure.

PR: How about a collectorís driving record?

CW: We base our rates on a clean driving record. Weíll allow one or two traffic tickets in three years, or a major speed violation as long as it was just one in a three year period. But if there are a lot of violations on a motor vehicle report, we would decline for that.

PR: How do the costs compare between standard and collector insurance?

CW: The premiums for collector car insurance are about 75% lower than for standard auto insurance. The average policy is running between $150 and $300.

PR: Is is possible to insure hot rods and modified/custom cars as well as original and restored collectibles?

CW: Weíre actually the leader in the street rod insurance business. We have a major sponsorship with the Good Guys organization. A lot of companies separate stock and modified policies, but we put them right on the same policy so you get your multi-car discount and the same coverages for restored and modified collector cars.

PR: What kind of driving and showing is a collector allowed to do under your coverage?

CW: We offer unlimited mileage as long as the vehicle is not your daily transportation. The vehicle can be used for club and hobby use, car shows, parades, and occasional pleasure drives. You can drive your any time you want, so long as itís not your daily transportation, and not used for racing. Also, all vehicles need to be kept in a fully enclosed and locked garage. Thatís because of the rates. To insure a vehicle at a low price, you have to have some kind of security.

PR: Do you offer coverage for cars used in racing?

CW: We allow touring around a track, such as at Good Guys events, but if a car was used in competition, the coverage would be null and void. Some companies will insure a racing car, but they donít insure them against damage when theyíre on the track.

Recommendations
Click on any item below for more details at Amazon.com

Tom Benford
The Complete Idiot's Guide to Restoring Collector Cars
Alpha, Paperback, 2004-08-03
The first 150 pages of this book are dedicated to the process of finding and deciding upon a restoration project and determining your restoration strategy. This part is covered in detail, and covered very well. The last 50 pages or so cover what to do with your car after the restoration is done, which leaves just over 100 pages to cover the actual work. For example, the chapter on engines assumes that the basic mill is in good shape, and simply covers tuning, carb adjustment, and freshening the engine bay. This is not a step by step mechanical manual - but it offers some of the best coverage on every other aspect of restoration.
External Links

ZHome.com has another interview about collector car insurance.

The top three collector car insurers:

Grundy Insurance

Hagerty Insurance

J.C. Taylor Insurance

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