Spring is upon us and many people are washing and waxing their antique or specialty vehicles, preparing them for a summer of cruising. Classic cars and trucks are popular during the warmer weather, but how are you insuring them? Most people just add them to their personal auto policies like they would any other vehicle, but is this the best way to cover your cherished cruiser?
The answer is no. Personal auto policies are not designed for the antique or specialty vehicle market and this can often cause problems when there is an accident. If you insure your specialty vehicle on a personal auto policy and then it is totaled in an accident, there is a good chance you will not be compensated for the full value of the vehicle. Some companies offer an antique auto endorsement on the personal auto policy, but in most cases the policy will pay out on the actual cash value of the vehicle or the limit chosen by you, whichever is less. If you total your vehicle and the limit you selected is $35,000, but the actual cash value of the vehicle is $15,000, you will receive $15,000. This doesn’t invoke much confidence in the personal auto policy’s coverage of these specialty vehicles.
Personal auto policies will also insure vehicles on a “stated value” basis. In order to obtain a stated value policy, you must have your specialty vehicle appraised. The appraisal must then be submitted to the insurance company for review, at which point they will either accept or deny the appraisal. If accepted, the vehicle will be added to the policy for the value stated on the appraisal. The problem is the vehicle begins to depreciate from that stated value and you often would not receive the appraisal amount after a total loss. With antique and specialty vehicles, values can increase over time as these vehicles become harder to find, and the personal auto policy does not account for that increase in value.
The proper way to insure these types of vehicles is to purchase an antique or specialty auto policy which is specifically designed for antique and specialty cars and trucks. Instead of actual cash value, which figures in depreciation based on the age and mileage of the vehicle, these policies work on an agreed value basis. Insurance companies that offer these policies are well versed in these vehicles and how they are valued. So, if your cherry red 1969 Corvette or your 1999 Lamborghini Diablo is a total loss, you will receive what the vehicle is actually worth on the specialty auto market as opposed to the depreciated value.
Antique and specialty auto policies are extremely affordable – the average price is approximately $300 for a year’s worth of coverage. A word of caution…there are some conditions attached to these types of policies. Most companies require that you keep your vehicle in a locked garage when not in use. Also, this vehicle cannot be your primary or “drive every day” vehicle. You must have another vehicle that you use for everyday driving, while your summer vehicle is used for Sunday drives, car shows, or the occasional after-dinner cruise. Typically, you cannot drive the vehicle more than 3,000 miles per year. If you drive your specialty vehicle to work every day, or find that you take long cruises after work almost every day, then this policy may not be for you.
Do you have a classic vehicle you save for the summer months? How do you insure it? Post your thoughts in the comments section below.
Note: Check with your agent to verify that the above limitations apply and that specialty vehicle policies are available in your area.