Classic Car Insurance: What Is It? How Does It Work?

Classic car insurance offers specialized coverage options and expert service tailored to the needs of classic car owners that a standard car insurance company may not provide.

A classic car insurance policy's most important feature is agreed value coverage, which means you and your insurer agree on the value of your car based on an appraisal. Many classic car insurers also provide additional coverage for things like displaying your vehicle at car shows and having expertise in exotic vehicle repair.

However, there may be drawbacks to using classic car insurance, such as mileage limits, and only certain cars are eligible for a classic car insurance policy.

What is classic car insurance?

The most important service and feature that distinguishes classic car insurance from standard insurance policies is agreed value coverage.

In an agreed value policy, you and your insurer agree on the value of your car, and that amount is insured. This could range from $10,000 to $100,000 or more, depending on what an appraiser determines your classic car is worth.

This is in contrast to how most cars are insured. If you own a commonly available car, your insurer will determine its value based on comparable models and repair costs. In this way, a classic car is insured more like a work of art than a vehicle because its value is determined by what buyers are willing to pay.

In addition, unlike traditional auto insurance, the maximum payout on an agreed value policy does not decrease over time. A 2010 Toyota Corolla is worth less today than it was in 2015, so the maximum payout you can receive may change as well.

A classic car, on the other hand, may retain or even increase in value over the same time period: A good-condition 1970 Dodge Challenger might have been worth $30,000 five years ago, and the same amount today. You'll have to manually adjust your policy's coverage amount based on the changing value of your car.

Other benefits of classic car insurance

The fact that these companies specialize in working with rare, collector, or antique cars is another major advantage of classic car insurance. When you have a classic car policy, the agents, adjusters, and other staff you interact with will be more familiar with the intricacies of a rare car and more knowledgeable about the needs of a classic car owner.

Further specialized coverages include:

• Increased replacement cost: If the value of your car rises above the agreed-upon amount, this coverage will cover the difference.
• Roadside assistance: This includes only towing with a flatbed tow truck to avoid wear and tear while transporting to a repair shop or back home.
• Auto show medical reimbursement: If someone is injured at an exhibit or event featuring your vehicle.
• No attendance required: Coverage is provided while you are away from your vehicle while it is on display, such as at a car show.
• Spare parts coverage: Covers damage or theft of spare parts like tires, valves or other gear, as part of a covered incident.
• Cash settlement option: If your car is totaled or stolen, you can accept a cash payment without having to repair or replace your vehicle.

Classic car insurance companies will also offer the most common car insurance coverages, such as liability, personal injury protection, and uninsured motorist coverage, in addition to comprehensive and collision coverage.

Drawbacks of a classic car insurance policy

Because classic car insurance is intended for rare or high-value vehicles, it has some limitations when compared to purchasing a policy from a mainstream insurance company. You will not find these disadvantages at every classic car insurer, so make sure to compare offerings from multiple insurers to find the best one for you.

• Mileage restrictions: Many classic car insurers will only allow you to drive your car a certain amount of miles per month in order to be eligible.
• Fewer discounts: Because many insurers that offer classic car insurance are smaller, more niche businesses, you may miss out on discounts for things like bundling policies, having a specific job, or using telematics devices.
• Fewer driving-related coverage options: Some coverage options available from a larger insurer, such as roadside assistance or extended medical payments coverage, may be unavailable from classic car insurers.

Eligibility for classic car insurance

Classic car insurance is not intended for daily drivers or everyday vehicles such as a new Toyota or Volkswagen. Classic car insurers typically require that the vehicle be unique in some way, such as advanced age, high value, or some customization.

In general, your vehicle must fall into one of the following categories:

• At least 25 years old
• Modern muscle car
• Exotic
• Modified vehicle

In order to qualify, your vehicle will almost certainly need to meet all of the following requirements:

• In good condition
• Parked in a safe and completely enclosed garage, carport, storage facility, or other approved structure
• Not used for daily commuting
• Not used for racing
• Annual mileage of no more than 7,500 miles (varies by insurer)

Driver eligibility

Furthermore, as the owner of the vehicle, you must usually meet certain requirements. These differ depending on the insurer, but in general, you must:

• Be at least 25 years old
• Have a clean driving record and at least five to ten years of experience.
• Have only one at-fault accident or moving violation in the last three years.
• Own and drive another vehicle as your primary mode of transportation to and from work, school, and other frequent destinations.
• Agree not to race or drive your classic car on a racetrack.

Collectible car types

Classic car insurance is also available for antique, exotic, custom, or historic vehicles, with similar benefits and drawbacks, though which types of vehicles are eligible for coverage may vary by provider.

While most collectible automobile insurance policies are similar, it is important to understand how carriers classify different types of collectible vehicles, including those that are excluded from coverage. Although definitions, years, and descriptions vary by insurer and state, the most common collectible auto categories are listed below. For the sake of simplicity, we will use the terms classic and collector car insurance interchangeably.

• Classic car insurance: Many companies define classic car insurance as being 19 to 24 years old, restored, in good working order, and worth more than the average value of other autos of the same make and model year; some insurers consider a car of this description that is only 10 years old to be "classic." Classic vehicles are those manufactured between 1925 and 1948, according to the Classic Car Club of America.
• Antique car insurance: Many companies define antique car insurance as being at least 25 years old and in good working original or original restored condition. Some states consider a car to be "antique" if it is at least 20 years old, whereas the Antique Automobile Club of America considers a car to be antique if it is at least 45 years old.
• Modified car insurance: Many companies define modified car insurance as being significantly altered in its engine, body, chassis, or interior from its original condition, which can negatively or positively affect the value; many insurers will not provide collectible coverage for these types of vehicles (for example, an antique car in which much of the stock equipment has been replaced or that runs on nitro fuel).
• Kit cars and replicas: These are representation automobiles that are at least 24 years old and have separate manufactured components, or they are assembled reproductions of any motor vehicle that is at least 25 years old.
• Other subcategories within these four major categories are as follows:
  • Street rods/hot rods built prior to 1949 that have been modified
  • Vintage automobiles manufactured between 1919 and 1930 that may or may not have been modified
  • Veteran vehicles made before 1919
  • Rare motorsport vehicles, vintage military vehicles, classic motorcycles, antique tractors and modern limited production models

Insurers for classic cars

Many well-known insurers, including State Farm, Progressive, Farmers, Safeco, Geico, and Esurance, as well as specialty carriers (many of which underwrite for the aforementioned companies), offer coverage for collectible vehicles, including Hagerty, J.C. Taylor, Condon Skelly, Grundy, and American National. Start your search for the right provider with your current auto insurance provider, which may be able to offer a discount for insuring multiple vehicles.

Classic car insurers

Cost of collector insurance and available discounts

Coverage for collectible vehicles is almost always less expensive than standard automobile insurance because you drive far fewer miles per year and are more likely to keep the vehicle safe and in good condition. Nonetheless, the cost of classic or collector insurance is calculated in the same way as standard auto insurance.

"Collector car insurance is generally very affordable, possibly costing around one-third of what regular auto insurance might cost," said Kristofer Kirchen, president of Advanced Insurance Managers LLC in Tampa, Fla.

Car insurance discounts that apply to standard auto policies also apply to collectible car insurance, with the amount varying depending on the insurer. Some of the circumstances that may qualify you for a discount include:

• Have multiple policies with the same insurance company.
• Insure more than one classic vehicle
• Have a clean driving record with no accidents or claims within the past few years
• Install an anti-theft device in your vehicle.
• Take a defensive driving course.
• Choose a comprehensive-only policy, which is ideal for owners who intend to restore their vehicle but not drive it.