A Guide to Insurance for Classic Cars
Whether you collect classic and antique cars or you have just completed the rebuilding of your favourite car from the past, you do need to give serious consideration to the type of insurance policy that you have on the car. Insurance specifically for classic cars is not a new concept in automobile insurance and owners have been able to take out a special policy for the past five decades. In spite of this many owners of classic cars still insure the vehicles under a standard car insurance policy.
A standard car insurance policy for an antique car is quite expensive and you have less coverage under such a policy as you do for the vehicle that you use on a daily basis. By contacting an insurance provider that does offer this type of car insurance, you can not only save some of your hard-earned dollars but you can obtain more coverage for the money that you spend.
In order for a car to qualify for the type of insurance that is available for classic cars, your car does have to meet the insurer’s requirements. A classic car is one that is older than normal, usually 15 or 25 years old. You are not permitted to use this car for commercial transportation. There are many people who would pay to get a drive in a classic car and there are some owners who do operate this type of business, such as wedding cars for the bride and groom. Therefore in order to qualify for specialized insurance, you cannot use it to make money. Another common requirement of insurance providers is that the classic car you want to insure cannot be the primary vehicle that you use every day. You must have at least one other vehicle that you normally use keeping the antique car for special occasions only.
Insurance policies for classic cars are called collectors’ insurance. There are some insurance providers who have specific ages for the car to be deemed classic and therefore eligible for such a policy and there are also those who will sell you this type of policy no matter what the age of the car. The premiums are usually a great deal less than that of standard auto insurance, but there are special guidelines for the use of the car to which you must adhere.
When choosing an insurance policy for your classic car, you do have the choice of Actual Cash Value, Stated Value or Agreed Value. It is important to have an understanding of what each of these terms mean before you decide on one policy over another.
ACTUAL CASH VALUE
This is the same type of policy with regard to the value of the car as you would have under a standard policy. If the car is completely destroyed or if it is stolen, the insurance provider takes the price that you paid for the car or the cost of having it being restored at the time you took out the initial policy. This amount of money depreciates every year that you own the car and pays out am amount of money equal to the worth of the car at the time of the accident. It means that you could realize far less money than the car is actually worth to you.
In this type of policy, the pay out of a total loss or theft of the vehicle will be the lowest possible value. The insurance provider looks at three different values – the stated value, the actual cash value and the cost involved in repairing the car. The stated value refers to the maximum amount the insurer will pay out, but having this amount stated in the policy does not guarantee that you will actually receive this amount of money in a settlement.
When purchasing an insurance policy for a classic car, this is the one that is most recommended. The policy guarantees an amount of money in writing and you will receive this amount of your car is completely destroyed or stolen. There is no actual cash value and no options for the insurance provider to pay out a lower sum of money than that stated in the policy.
You can also purchase additional insurance for the replacement value of the car.
Taking out insurance for a classic car also subjects you to some restrictions. For example, you may be only allowed to drive a set number of miles per year and you may not be permitted to drive to and from specific events, such as car shows. You should make sure that you read the fine print of any policy that you purchase so that you are fully aware of the terms of the insurance policy and that it does meet your needs.