Your classic car or truck is a treasure! You’ve been carefully restoring this gem for years, or you invested in a custom beauty, built by professionals. Regardless of how you became a steward of this special auto, it must be adequately insured.
Standard consumer auto policies are not a great fit for classic cars. Today, we will take a deeper look at the reasons why and explain classic auto policies in detail for the average enthusiast. Let’s begin with a definition of classic cars.
Classic, Historic, Vintage and Antique Vehicles Defined
For most US auto enthusiasts, classic cars are at least 20 years old. Antique cars are at least 45 years old, and vintage autos were manufactured between 1919 and 1930. These are the terms one enthusiast would use when speaking to another at a car show.
But it doesn’t end there. Some states and some insurance providers use other definitions.
Your State DMV Has a Definition of Classic Cars
California, for instance, has a unique description for classic cars – it may or may not affect your decision to insure your vehicle as a classic.
- Per the California Department of Motor Vehicles (DMV) if the vehicle was manufactured after 1922, and is at least 25 years old, it is a Historical Vehicle.
- However, if it has a 16-cylinder or larger engine, and was manufactured between 1922 and 1965, it is classified as a Horseless Carriage.
Modified cars are not considered historic by the California DMV.
However, just because the DMV doesn’t call your modified classic auto “historic” doesn’t mean your vehicle isn’t classic or collectible!
It’s all about values. We’ll get to that in a moment.
Insurers Set Their Own Definitions for Classic Cars
At Hagerty, a well-known insurer in the realm of classic cars, autos built in 1900 to 1979 are considered Classic or Antique. If the car is manufactured in 1980 or later, it is called a collector car. But every specialty auto insurer can make their own definitions.
Now that we have a clearer understanding of classic auto classifications, let’s talk about classic car insurance.
Standard Auto Policies vs. Classic Car Insurance
Standard auto insurance policies are designed for daily driving. Every insurer works a little differently, and every state has slightly different requirements, but most insurers count on a vehicle to be driven about 12,000 miles a year.
- A typical auto insurance policy is based on liability coverage.
- Liability coverage protects the driver / owner from financial responsibility in an accident.
- Collision coverage usually covers all types of collisions and crashes – whether the vehicle collides with a building, another auto, or a telephone pole – it’s all collision.
- Comprehensive coverage covers other types of damage: like a hailstorm, theft, or a garage fire.
- Other coverages available could include personal injury coverage, medical payments to others, glass coverage and so on.
It’s important to note that “full” coverage (liability, collision and comprehensive) is largely based on the value of the car. For instance, if you owe $30,000 on the auto loan, hopefully your vehicle is worth close to that amount, and your insurance policy should pay back most of that $30,000 if the car is stolen or totaled. (If not, you’ll need GAP insurance, and that’s a topic for another day.)
For now, know that car insurance companies use a standard valuation similar to Kelley Blue Book (KBB) to decide what a car is worth.
Classic Car Insurance Works Differently
Classic auto policies will also cover liability, comprehensive, collision and so on. But these policies are designed for cars that are driven less and treated differently by the owner.
They aren’t commuter vehicles. And the standard valuations used by insurance companies won’t reflect the investment in a collectible car.
Thus the need for classic car insurance.
“Is My Car a Classic? Do I Need Classic Car Insurance?”
It really depends on the vehicle. If we go by the standard 20-year rule, a 2000 Honda Accord is a classic car. If you’re using the Accord as a commuter, or a “winter beater,” or a first vehicle for your teenager, classic car insurance isn’t appropriate.
However, if you’ve been restoring this car as special item, it’s worth considering.
- If your investment in an older auto is much more than it’s Blue Book Value, you should consider classic car insurance.
- Also, if you treat your older vehicle like a special vehicle, rather than a commuter, you might prefer classic car insurance.
The challenge for many enthusiasts is finding a reasonable valuation.
Finding a Valuation for Classic Cars and Trucks
Not sure of the value of your classic car or classic truck? Hemmings Magazine – a well-respected resource for enthusiasts – offers this helpful valuation tool online.
Just enter the year, make and model to see high and low values for your vehicle. Of course, extra modifications, provenance or specialty paint can affect the price of your classic car, too.
This leads us nicely into the ideas of stated and agreed values.
Classic Car Insurance: Stated Values and Agreed Values
The concepts of stated values and agreed values are crucial when considering which classic auto policy to buy. If you have an expensive classic you want an agreed value policy.
Stated Value is an amount that is “stated” at the effective date of the policy. You will tell your insurer what the car is worth, and it is insured for that amount. The issue, though, is that the insurance company can choose to pay you either the Stated Value or the Actual Cash Value, whichever is less!
Agreed Value is the preferred option for classic auto owners and is usually offered only by specialty auto insurers. It’s based on the proven value of your car PLUS appraisals, photos, or other relevant documentation. With Agreed Value coverage, the insurance company guarantees they will pay this agreed-upon amount if your classic car suffers a total loss.
Agreed Value Classic Car Insurance: The Thought Process
Let’s imagine a classic auto enthusiast named Gordon. His passion is bringing older trucks back to showroom quality. He’s modified and restored dozens of classic trucks. Today, he’s finishing a 1975 Ford F-150 with stepsides. The stepsides make it a very rare truck, only a few hundred were built in 1975. 45 years later, there are very few left.
Gordon has added a modern sound system, a brand new Edelbrock engine, an enhanced exhaust and so on. It still has the original paint, but he’s added new air conditioning, new glass, new rubbers and some other goodies. The golden question becomes: What is this truck worth?
The rarity of this specific truck, his time and talent at restoration, and the value of the modifications make it impossible to quantify. The blue book value of a 1975 Ford F-150 might only be $7,000. The Hemmings valuation tool says something like $25,000. But Gordon’s trucks sell at auction for much more, even $40,000.
He contacts a classic car insurance company for an agreed value policy. He sends them many photos of the truck – interior, exterior and under the hood. Together, they agree to insure it for $35,000. Gordon rests easy, knowing that if his truck is stolen or totaled, he will be made whole by the insurance company.