Classic Car Insurance: What is it and how does it work?

If you have a 1977 Pontiac Firebird Trans Am, 1986 Monte Carlo SS from Chevy, or a 1970 Mustang Mach 1 sitting in your garage, you should be sure that it is protected with classic or collectible automobile insurance. While proper oil changes, tire inflation, and cleaning are important parts of maintaining your classic vehicle, insuring your car may be the most important thing you can do for it.

Unfortunately, obtaining the right coverage is not as simple as spending 15 minutes with your favorite gecko. Like the car itself, a classic automobile policy is unique and sometimes complicated to get right. This guide will walk you through the different aspects of classic car insurance and give you the confidence that your collectible vehicle has the protection it deserves.

Classic Car Insurance: A definition

It may be beneficial to start with how traditional car insurance works. Most auto insurance covers the value of your car – the cost it would take to replace it including the amount it has depreciated. If you bought a car six years ago that cost $40,000 and it has depreciated by $15,000, your insurance company would pay out $25,000 (cost of replacement – depreciation = payout). 

Insuring classic cars cannot work this way. Using the model of depreciated value is impossible and would make virtually every insurance plan useless when it came to restored autos. The most desirable classic cars do the opposite of depreciating – they appreciate in value. Classic car insurance providers must take this into account and use a different insuring model entirely. 

Auto insurers that specialize in classic cars typically use a model resembling other insurances that cover valuable objects. An amount, or value, is agreed upon by both parties (you and the insurance company) and the insurer guarantees a payout of up to that amount in the event the vehicle is damaged or destroyed. 

There is a method of coming to a reasonable value. Usually, an insurance company will require an appraisal of the vehicle then combine that information with a reputable pricing guide geared toward classic cars. Once the dollar value is determined, the insurance company is required to pay the full amount in the event the vehicle becomes a total loss. 

The Various Forms of Specialized Auto Insurances

The description of classic car insurance is generalized and does not represent all forms of special auto insurance. Each insurance provider is unique in what types of vehicles it will cover and how it insures them. 

There are several broad categories of insurances geared toward collectible vehicles. This list breaks down the various forms but it is important to remember that it is not comprehensive as each state and provider has unique characteristics.

Antique Cars are defined as being at least the ripe old age of 25. The car must be running or must have been restored to its original, running condition. There are variations in the age requirement with some states suggesting 20 years is antique while more stringent policies require 45 years for this type of coverage.

Classic Cars are often between the ages of 19 and 24 years. The car must be restored and in good, running shape. In order to cover a classic car with specialized insurance, proof that the car is more valuable than others of the exact same make and model is often required. Requirements do vary and can be as little as 10 years old.

Modified Cars are those that have undergone significant alterations. These changes might have been made to the body, chassis, engine or interior of the car. The alterations could raise or lower the value of the car but in any case, render the car different from its original design. It is important to note that Modified Cars are difficult or impossible to insure with classic car insurance regardless of their age.

Replica Cars can be older but are typically assembled parts made to represent a classic vehicle. These reproductions are frequently of vehicles produced greater than 25 years ago. Many Replica Cars come in the form of a kit manufactured for the purpose of reproduction.

Older “classic cars” are not the only unique vehicles that can be challenging to insure. Exotic cars are typically less than 15 years old but often increase in valuation.  These vehicles require a similar specialized process but do not fall under the classic car insurance umbrella.

What Kind of Coverage Can I Expect?

The process of insuring your classic vehicle may be different than traditional car insurance but the coverage options are similar. Policies are typically taken out on a 12-month basis and include the usual coverages: collision, comprehensive, liability, medical, and uninsured driver. 

Like most insurance plans, state law dictates the amount of coverage required for a classic or collectible vehicle to be considered legal on the roadways. There are optional add-ons for classic vehicle policies. The common options are:

Auto Show Coverage

This coverage is like a homeowner’s policy in that it covers medical payments for someone injured at an auto show exhibit where your classic car is on display. If someone is viewing your vehicle and takes a tumble, this coverage will pay for any applicable medical expenses up to the coverage limit.

Parts Coverage

Many classic or collectible car restorers keep spare parts on hand. This coverage will pay for any parts you might have that are damaged or stolen.

Travel Coverage

If you are making your way to an auto show and your vehicle breaks down, you will likely incur some unexpected costs like meals, a hotel, and a rental to get you where you need to go. Travel coverage provides reimbursement for this instance.

Unattended Vehicle Coverage 

If you leave your vehicle at an extended show and it is damaged, you will want to have had this type of policy add-on. It does not require you to be present or in control of the vehicle to offer coverage for damages.

Roadside Coverage

Towing a classic car can be costly depending on the distance you will need to cover after a breakdown or flat tire. Roadside coverage offers reimbursement for towing expenses.

In any case, it is important to note that these add-ons can be selected a la carte. If you do not take your classic vehicle out on the road or to car shows, some of these may not be appropriate for you.

Is My Classic Automobile Eligible for Classic Car Insurance?

There are specific requirements insurance providers insist that classic cars meet before agreeing to insure them with these unique policies. For instance, if your collectible happens to be your “daily driver”, then you would not be eligible under most classic car insurance standards. 

The typical mileage-per-year maximum is 7,500 miles. This allows you to take your classic auto out for a short spin and participate in shows or parades. If you insure your car under a classic car policy and it is discovered you drive to work or run errands in the vehicle, the insurance company may void the contract of coverage.

Here is a quick list of other requirements typically found on classic automobile policies:

• Location: Unique insurance policies like these may not be available in certain regions, cities, or states.
• Driver age: In most cases, the classic vehicle owner must be at least 25 years of age.
• Driver record: A good, clean record (no accidents or tickets) is a must and insurance companies prefer drivers with an extended driving history (five to ten years).
• Vehicle condition: The classic car or collectible vehicle must be in running shape and capable of driving on the road. Additionally, many insurers require the car to be kept in a garage, under a carport, or in an alternative storage building.
• Driving frequency: The classic auto must be a collectible and not used for daily driving, errands, or long trips.
• Driving behaviors: No racing. No drifting. No driving behavior that places the vehicle at undue risk.

Given the unusual coverage classic car insurance policies provide, insurance companies are far more judicious about what vehicles they will insure. If the car is deemed unworthy for any reason, coverage can be denied by the insurance provider. However, once your classic car is protected by insurance, you will likely sleep easier at night.

The Cost of Doing Business

The common misconception is that covering a classic or collectible car must be wildly expensive. In reality, this is untrue. If you look closely, it makes sense that insurance companies have less anxiety over these types of cars – they are rarely driven, adored by their owners, and often kept indoors. 

With that said, the determining factors for policy costs align with those of typical automobile insurance. The overall value of the vehicle plays a big role, along with the location the car is kept. 

Like other insurance plans, discounts are readily available for those who qualify. Examples of discount opportunities include:

• Loyalty: If you have regular insurance with the provider or insure another classic vehicle with them, a multi-policy discount might apply.
• Safety: Keeping your driving record impeccable pays in many ways. Discounts are often offered to those who have no accidents or judgments on their records. For those looking for further discounts, inquire if your provider looks fondly on taking a defensive or safe driver class.
• Security: Theft is one of the major drivers of automotive insurance costs. Installing a car alarm goes a long way toward the security of your classic car and frequently triggers a discount from the insurance companies.
• Limited Policy: Major cost savings are available for those who do not drive their classic cars. If your vehicle is a true collectible, insurance companies offer policies that cover damage while off the road or theft. These plans are typically less expensive than those that cover driving risks.

Finding the Right Coverage for Your Classic Car

Okay, okay, you have heard enough. You are ready to get coverage for your classic automobile. Now how do you go about getting it?

If you are happy with your current insurance company, you can reach out to them and see if they have a specialized coverage option. This is ideal if they also offer a multi-vehicle or loyalty discount. Most of the major companies like GEICO, Farmers, Progressive, and State Farm offer some form of classic car coverage (depending on the area you live in). Some smaller, specialty providers do, as well. 

Even if your current provider offers insurance options for your classic car, you might want to do some shopping to see if a better rate is available elsewhere. The discounts for multiple vehicles do not always outweigh cheaper rates with another provider.

Here are some “pro tips” for those shopping for classic or collectible car insurance:

1. Know your value: Resources like the Kelley Blue Book can be helpful but a professional appraiser can provide documentation that will ensure your provider gives you the right amount of coverage. Have this done before you shop and start negotiating with insurance companies.
2. Use an agent: The best advice is to seek help in this unique process. An agent that knows a lot of classic car insurance can keep you from missing important details and help you find exactly what you need.
3. Read everything: Classic car insurance plans differ greatly and it is vital that you know precisely what your policy covers. If you are unsure, ask your agent (see #2) or clarify with the insurance company.
4. Keep convenience in mind: Most classic and collectible car owners have a favorite auto body or repair shop they use. Make sure your insurer will allow you to use those shops before committing to their coverage. 
5. Have annual reviews: Classic car values can swing dramatically from year-to-year, even without any major changes to the vehicle itself. Take time to review your coverage each year and ensure it is still what you need.

As mentioned earlier, insuring your classic or collectible automobile can remove some worry from your life. These little known policies can be a lifesaver if something should happen to your pride and joy.