Those who own or plan to buy a classic car should ensure their insurance coverage keeps up with rising values
Older cars are hot items these days, with a growing number of aficionados dipping their toes into the collectible market both for the sake of nostalgia and as automotive investments. As a result, prices of the most valued models - particularly muscle cars Baby Boomers lusted after when they were young - are rocketing to sky-high levels.
For example, at a Barrett-Jackson collectible car auction held this September in Las Vegas, a 1967 Mustang Shelby Super Snake sold for $330,000, while a 1962 Lincoln Continental Convertible went under the hammer for $113,300 and a 1970 Plymouth Hemi Superbird Two-Door Hardtop fetched $297,000.
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. Still, as some unfortunate enthusiasts discover, they need more than just conventional auto insurance coverage to protect even a modestly valued vintage car.
"The most common mistake that classic car owners make when it comes to insuring their classic cars is assuming a standard auto policy will cover its full value," says Jonathan Clinger, a spokesperson for classic-car insurer Hagerty Insurance in Traverse City, Mich. That's because typical auto policies are designed only 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," Clinger says. "Otherwise, it's 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."
While antique and collectible car insurance coverage is similar in many ways to conventional policies - both types include liability, collision, comprehensive and, depending on the state, uninsured or underinsured motorists' segments - some aspects are specific to the genre. 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. 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.
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, Clinger 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 they 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 1950s and 1960s vintage American models, still have original equipment replacement parts readily available, in many cases the parts are no longer produced. In those cases, used, rebuilt or (in some cases) specially made parts would be covered to bring the car back to the condition it was in prior to the claim.
In addition to Hagerty (www.hagerty.com), other major insurers specializing in antique and collectible cars include Grundy Insurance (www.grundy.com), Heacock Classic (www.heacockclassic.com) and American Collectors Insurance (www.americancollectors.com).
(c) CTW Features