Insuring Your Classic Car: The Basics

Whether your classic car is a vintage MG or a restored antique Ford, the major considerations are the same: You must be able to explain to the insurance company how the car will be used and maintained, and you must be able to document the car's value and history. The goal you must keep in mind is to come to a level of coverage that is both appropriate for your rare and beloved vehicle, and also reasonably affordable.

In order to help arrive at the goal of finding the cheapest car insurance for your classic car, there are several questions you should be able to answer before you speak with a prospective insurer. They include:

• What is the car's actual value? If you haven't had the car evaluated by a certified automobile appraiser, consider doing so – if you don't the insurance company likely will – so you know the car's real worth before you begin negotiations.

• What is the degree of liability? In other words, how, and how often, will the car be used? Almost all major classic car insurance companies (including American Collectors Insurance, Grundy, and Hagerty) allows a certain amount of leisure driving, but they also require proof that you own a properly insured "daily driver" vehicle.

• My car is in the middle of being restored. Do I need coverage now? There are policies to protect the car during test drives and while it's being rebuilt.

• Where and by whom will repairs be made? You may need to consider extra coverage to protect from theft or damage when your car is in the hands of your mechanic.

• Do I have all the required documentation? This includes photos and receipts for any modifications and restorations, as well as proof of ownership, and the results of any appraisals.

As you may have noticed, insuring a classic auto is mostly about the paperwork. Classic car insurers are accustomed to working with vehicles that have high intrinsic values, that will be driven only on a limited basis, and that will be stored in protective conditions, but they are also accustomed to working with clients who are veritable experts on their own vehicles.

Valuation Terms

Part of this expected client-side expertise includes the understanding of three insurance terms, all affecting valuation. They are:

• Actual Cash Value: This is what is used to determine coverage for mainstream, daily driver vehicles, and it pays out the "book" value of your car, minus depreciation. This is NOT the right choice for classic cars.

• Stated Value: This type of coverage is based on a value set by the owner, but it comes with a caveat: the insurance company does not have to use that value to determine your payout if you make a claim.

• Agreed Value: This is when you and the insurance company look at your documentation, including photos and appraisal, and come to a value you both accept, which will be used for payout. This type of coverage is designed for classic, collectible, and exotic cars.

If you have adequately answered all of the questions posed in the first part of this article, and have come to the decision that a classic car specialist is the best type of insurance company for your classic auto, coming to an acceptable agreed value, and getting comprehensive coverage for a price you are willing to pay, will be relatively easy.

Just remember: it's all about the paperwork.