Collector Car Insurance
Some companies specialize in collector car or classic car insurance. While your regular automobile insurance company may offer specialty insurance for car enthusiasts, search out different options for collector car insurance and compare. If fact, you may possibly obtain better coverage while saving money.
Usage and Valuation
The importance of proper collector car or classic car insurance cannot be overstated. In particular, the key considerations are the Usage and Valuation of each vehicle. This is because no one wants to learn after an incident that their special car was not properly or fully insured. Accordingly, more regular auto insurance companies now offer specialty coverage for collector cars. And more specialty insurance companies now offer coverage that includes daily-use cars.
Compare the insurance coverage offerings. By all means look for limitations on usage and mileage for collector cars, and definitely ask detailed questions. In doing so, make sure that the specialty insurance permits usage of the vehicle in a manner suited for your lifestyle.
Actual Cash Value (ACV)
It is important to recognize that traditional automobile insurance pays Actual Cash Value (ACV) involving declining value depreciation. Specifically, ACV means that over time the car is usually worth less as it ages and depreciates in value. Also, its present value is not finalized until an incident occurs. In essence, ACV is less desirable for collector cars as depreciation may not be appropriate. Instead, a classic car's true value may remain stable or increase over time.
Alternatives to ACV
Agreed or Stated Value
Since a classic's true value may remain stable or increase over time, collector car and classic car insurance usually specifies a value, either Agreed Value or Stated Value. Either value helps determine the price you pay for the insurance, and a vehicle appraisal may be needed. Furthermore, it is important to understand that these terms, agreed value and stated value, are distinctly different and not interchangeable.
Agreed Value Insurance
Agreed Value insurance is perhaps the best way to insure collector cars. In short, you and the insurance company agree on a specific value for the vehicle. Then the agreed value is referenced on the policy. In the event the vehicle is totaled, the agreed value (minus deductible) is paid. Thus with agreed value insurance, there should be no disagreement beyond possibly whether the car is repairable.
Stated Value Insurance
Stated Value differs in that it provides a maximum rather than a guarantee. Thus, a stated value policy pays the lesser of depreciated ACV or the stated amount. In other words, stated value insurance is essentially ACV with a cap, and that cap is the stated amount on the policy. This clarification makes stated value insurance most beneficial to those choosing to reduce insurance costs by not fully insuring the vehicle's true value.
Distinguishing between Agreed Value and Stated Value is very important. Unfortunately, many owners mistakenly believe that a stated value policy provides assurance that they would receive the stated amount (minus deductible) if their vehicle was totaled. In reality, this is not necessarily the case with stated value.
Research and Compare
Research and compare the specialty insurance options available. Again, be aware and ask specific questions on usage and valuation limitations. Consider the following collector car insurance companies, and then compare with your current insurance carrier.
American Collectors Insurance
American Modern Insurance
Classic Automobile Insurance
J.C. Taylor Insurance
(For reference only. We do not sell insurance and have no affiliation with these specialty insurance companies.)
Valuation for Insurance
The above section on Collector Car Insurance highlights the importance of ascertaining in advance a reasonable value for your collector car. Fortunately, several sources track car values based on the condition. For more information, click Car Values.
Loss in Value After Accident
Did you know that an accident decreases a car’s value, even after being repaired? And it impacts virtually every vehicle repaired after an accident. Specifically, its technical name Diminished Value quantifies the loss in value after an accident. To learn more, click Diminished Value.
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