Insurance That Isn’t An Offer You Should Refuse

There is a form of vehicle insurance that’s not a moral outrage – because you’re not forced to buy it.

Classic car insurance.

Ordinary car insurance (the kind you’re forced to buy) is a bad idea in principle but also when it comes to protecting classic cars because they are considered old cars by the insurance mafia.

And most old cars aren’t worth very much.

Or rather, the mainline insurance companies often don’t think they are – and pay out accordingly.

But your classic might be worth a lot – and not just to you. If it’s been meticulously restored – or in pristine original condition – it’s probably worth more today than whatever it sold for when it was brand-new.

Adjusted for inflation.

Almost always a lot more than whatever the NADA or Kelly Blue Book says it’s worth.

These guides are used car value guides. Using them to value a classic car is like using a generic real estate square foot/how-many-bedrooms-has-it-got calculator to establish the value of a Frank Lloyd Wright House.

If you have ordinary insurance and your classic car is damaged – whether by someone else or by nature,  such as a tree branch falling on it at a car show – your “coverage” may not cover very much.

You may have to fight to get the insurer to cover anything.

Classic car insurance, on the other hand, will usually cover everything – guaranteed. Before anything needs to be covered. And it will usually cost your less than the insurance you’re forced to buy – kind of like Obamacare vs. what we used to have when the government didn’t force you to buy “coverage” for that.

If someone totals your classic car and it’s appropriately covered, at least you’ll get back the full value of the car – which will make you feel a little better about having lost the car.

That’s an offer you shouldn’t refuse.

But why is classic coverage so much better – and so much more reasonable?

Unlike regular insurance, classic car coverage is individualized coverage. Your car isn’t lumped in with other cars and its value assigned according to some one-size-fits-all underwriting formula.

Your policy will be written for for your specific vehicle.

More precisely, its specific condition – which is as much a factor in terms of establishing its value as its make/model/year.

One 2019 Mustang GT is pretty much like any other 2019 Mustang GT.  If you suffer a loss, the coverage/payout is based on the average retail market value of a generic 2019 Mustang GT.

Adjusted for depreciation.

But your restored or mint condition/original 1970 Mustang’s value is much greater than the value of a basket-case 1970 Mustang with holes in its floorpans, primer on its panels and blue smoke billowing out of its hanging-by-a-coathanger exhaust pipe.

Any car that has survived 25 years or more – the usual statutory definition of a “classic” car – has become a one-of-a-kind almost by definition. Especially if it’s an original car, with its as-installed drivetrain and factory paint – and in mint condition.

Interestingly, such a car is almost always worth more than a restored car – even if the original car’s paint has a few spider webs or scratches and the engine’s a little greasy.

Because a car is only original once.

But the take-home point as regards insurance coverage is that every classic car is unique.

This is why many classic car policies are based on what’s called agreed value. You and the underwriter come to an agreement as to the replacement value of your particular car – often on the basis of an appraisal and/or documentary substantiation of its condition relative to others like it.

Most policies will take into account such things as original condition, money spent on restoration/modifications – and so on.

The important thing is you and the insurer will come to an agreement about what the car is worth before it becomes necessary to file a claim. Hopefully, it will never be necessary to file a claim. But if it ever does become necessary, you will only have to deal with the trauma of the loss of a beloved possession – not with the loss of your shirt.

There are, of course, some caveats.

Classic car coverage is usually based on limited use – i.e., that the car is not driven daily – and on “classic” (or “antique,” the classification depends on your state) vehicle registration.

The mileage limit is usually adjustable and your rates will vary accordingly. Some insurers will want an odometer reading at policy renewal time.

Some insurers also require that the covered vehicle be covered – physically, in a garage. You may not be able to get classic vehicle coverage if the vehicle is parked outside or even under a carport.

The usual rule is an enclosed/secure garage.

The reasons for both caveats are obvious and reasonable – and account for the usually lower cost of classic car coverage – even though the potential payout in the event of a loss is much higher than it would be under the terms of even a “full coverage” standard insurance policy. Because the payout isn’t based on the rapidly depreciating generic book value of a new-ish car.

No ordinary policy will pay what you paid for your new car – unless you’re lucky enough (so to speak) to wreck it within a month or so of having driven it off the dealer’s lot. If it’s a year after you drove it off the lot, you’ll be lucky to get 85 percent of what you paid for it.

Less, the next year.

Because new cars lose value with each passing year – and mile. Classic cars usually at least hold theirs . Often, their value goes up.

But only if they are well-kept, kept under cover – and not driven as much.

Hence the policy caveats. But well worth it, for once.

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