I hope the following will answer many of your questions related to this subject. I also encourage you to follow up by giving the people at Hagerty Classic Insurance a call, if you would like more information. They have always been most friendly, knowledgeable and helpfull to me. I'm sure you will be treated in the same manor.
I hope this is of benefit to you,
Carl Beck, President
Internet Z Car Club
Throughout its fifteen-year existence, the people at Hagerty Classic Insurance have answered these questions from hobbyists and collectors on a variety of topics associated with collector car insurance. McKeel Hagerty, President of Hagerty Classic Insurance, has categorized the most common and important questions and provided informative and helpful answers.
"We want the car collector and general hobbyist alike to know the realities associated with owning and protecting collector vehicles", comments Hagerty, a leading expert on specialty auto insurance. "Because there are significant differences between specialty and standard insurance programs, we want to provide people with the correct information that will dispel any misconceptions they may have as well as save them a lot of money. "
How are most collector cars insured? Less than half of the collector vehicles on the road today are insured by specialty programs. Although, collector car insurance has been available for five decades, most owners of collectibles, specialty cars and street rods are still insuring them through a standard insurance company despite the higher cost and often more restrictive policies.
Are specialty insurance program premiums less than standard insurance premiums? Yes. Standard insurance annual premiums can cost up to 500% more than those offered by a specialty program. Although standard companies provide adequate coverage for the "daily driver", they rarely offer the added benefits associated with collector car programs. One example is that a stock vehicle, valued at $10,000, can be covered by Hagerty Classic Insurance for as little as $90-95 per year.
What is the difference between insurance specialty programs for collector vehicles? Although there are several fine specialty programs, there are differences among them. Levels of service, rates, types of coverage and claims handling all vary from program to program. Anyone insuring a collectible should research all programs before making a final decision. Varying costs should be considered, of course, but should not be the determining factor. REMEMBER when buying insurance you are buying "service" so first look for quality customer service, excellent claims handling, knowledgeable staff who know and understand collector vehicles, and an overall impression that they care about you as a customer.
What are the different kinds of insurance coverage? There are three types of automobile insurance offered today: Actual Cash Value (ACV), Stated Value, and Agreed Value. ACV coverage is what insures most everyday cars and pays out a depreciated "book" value in the event of a claim: the older a car is on an ACV policy, the less value it has. Some insurance companies offer Stated Value policies for collectibles. These policies are better than ACV because they allow you to "state" a value for your vehicle greater than its depreciated "book" value. But, Stated Value can still depreciate vehicles because the policies generally require the insurance company only to pay "up to" the "stated" amount. Only Agreed Value insurance policies guarantee you will get all of your money back in the event of a total loss. There is no depreciation of a car's value with an Agreed Value policy. This is why Hagerty offers only Agreed Value coverage to its customers.
What kinds of vehicles are collectible? This is a difficult question to answer briefly because the market is broadening so rapidly. It's not just Ford Model As, 57 Chevys and Packards anymore. Now, Hot Rods, muscle cars, vintage pickups, vintage racers, sports cars and even 70's cars are being collected. The old categories of "antique and classic" are still there for the purists, but today people are collecting more and different cars than they used to. Yes, even AMC Pacers are finding a niche within the hobby, especially if they have the Mojave stitched interior option!
Do specialty insurance programs have a vehicle age cutoff? While the old standard used to be 25 years and older, it is always best to inquire on a per-vehicle basis. We take a much broader view about the age of the vehicles we will insure. There are new cars that are insurable as collector cars. These tend to be exotics and sports cars, however.
Is there specialty insurance for street rods and customs? Yes. We feel that rods and customs are a very important part of American automotive history. And we're thrilled to insure them. But because the very nature of these cars is that each is unique, there are some differences in how they are insured. The difficulty is in determining their value. You can't just look in a value guide to see how much they are worth. So we dig a little deeper into the mechanical and aesthetic modifications made to the car, its horsepower, suspension system, paint scheme, etc. It doesn't take long to determine a value based upon the base value of the car to begin with, then the parts and labor that were added. Quality of the parts and workmanship are important factors. And in some cases there is a premium put on cars that were "built" by well known or famous builders.
I have an exotic. Can I get specialty insurance coverage? Yes. We insure even brand new exotic and sports cars. Among these, we tend to look for rare vehicles that will be used as a collector car rather than a daily driver; this indicates that the car will be kept in good shape and thus that the value will be maintained.
Do collector car programs impose mile restrictions? Many specialty programs strictly limit owners to driving their collector vehicles to 2,500 miles per year. They may even require annual odometer readings. Hagerty Classic Insurance offers flexible usage guidelines. This means that if a person has regular cars that are driven daily and their collector cars are used on a limited basis consistent with owning a valuable vehicle, then we do not strictly limit the mileage they may drive.
Am I limited to driving my collectible only in parades or shows? What if I want to take a Sunday cruise? Enthusiasts like to share their collector cars with the public but they also just enjoy driving them around. While some programs require that collector cars are only to be driven in activities of public interest, we also allow for and encourage the private enjoyment of collector cars. Go ahead and take that Sunday drive. Nevertheless, collectors should consider these types of restrictions and find a policy with flexible usage guidelines that best suits their overall needs.
Are there other usage limitations? Yes. Most specialty insurance programs, including Hagerty--do not allow vehicles to be used for the commercial transportation of goods or passengers, for racing, or for daily transportation.
Are young drivers covered in a specialty insurance policy? It depends. Many specialty insurance companies require that all drivers be 25 and older; some even require that a person be 30 years old. While Hagerty generally will not consider an owner/applicant who is younger than 21, we are somewhat more flexible when a family of collectors has teenage drivers with clean driving records. I, for example, would not have qualified for most programs after my dad and I restored my 1967 Porsche. But I was a great insurance risk. I had a regular-use car, a clean record and I only took my collector car out on nice summer days.
What is the determining factor of computing an annual premium? First and foremost, insurance is regulated on a State by State basis. So there are slight differences from State to State, but generally they are fairly consistent. Physical damage coverage, comprehensive and collision, makes up the majority of a given premium. This is calculated by the value of the car and it's age. For example: the physical damage price on a 1965 Mustang worth $10,000 is $60 with Hagerty; if the car was worth $20,000 then the physical damage rate would be $120. Liability coverages are much more complicated to explain, but fortunately for consumers they are very inexpensive, usually somewhere between $30-50. And with Hagerty, in most states, we charge liability only one time. So no matter how many cars you own, we charge that $30-50 only once. We even have a customer with 2007 cars and is charged only one liability charge.
What if I have five cars? Do I get a break on my premium? You can. In most states, Hagerty charges a single liability charge no matter how many collectibles someone owns. After all, you can only drive one car at a time!
How do you value a classic? While we are not in the business of appraising cars, we are in the business of insuring the "value" of cars. So we spend a great deal of time watching the market value of cars and helping people adequately insure their car for an appropriate value. With this, there are many factors that we consider when valuing a vehicle. The first consideration is whether the car is a stock original vehicle. If so, there are many resource guides and pricing books that can provide value guidelines based upon the overall condition of the vehicle. These are somewhat less useful for newly restored vehicles and even less useful for street rods; because every newly restored car is restored to a different level of perfection and every modified car is different by nature. So with both newly restored cars and modified cars we dig a little deeper into the project, the amount of money spent on it, the type of parts used, etc. Our best advice is for people restoring cars or building a street rod to keep detailed lists of the work performed and receipts for all parts and labor. This will help us when attempting to insure the car properly and the whole process will be smoother. Occasionally, appraisals help but they're not always necessary.
What happens if I have a claim? Unfortunately, this question isn't asked often enough. When you call to report a claim, you want a friendly, sympathetic voice who is ready to solve your problem immediately rather than a impatient stranger who dickers with you over how much the insurance company is willing to pay. Hagerty Classic Insurance offers in house claims administration so that all customers receive the friendliest and fastest service from people who know collector cars.
Isn't it easier to stay with my standard insurer? Ask yourself the following:
- - Do I mind paying a significantly higher annual premium?
- - Do I mind paying more than one liability charge on mycollection?
- - Will I get the full value of my classic back if it's totaled?
- - How will I be treated when I have a claim?
The bottom line? Classic car insurance will save you a lot of money. Interested hobbyists and collectors can now afford to own, insure, and enjoy their classics because specialty insurance programs offer lower rates and better benefits than standard insurance companies.
Hagerty Classic Insurance has been in the insurance business for five decades and in the specialty insurance field for fifteen years. As the leading specialty insurer of classic and collectible automobiles in the United States, Hagerty's goal is to provide superior service and programs to its customers. For additional consumer information on collectible car insurance, call Hagerty's friendly, knowledgeable staff at (800) 922-4050 or visit www.hagerty.com