Frequently Asked Questions: COLLECTOR CAR INSURANCE 101
What is the difference between Agreed Value, Actual Cash Value and Stated Value?
Agreed Value is a value determined by you, the collector car owner, and agreed upon by the collector car insurance company underwriters based on information and photographs you provide to them. Actual Cash Value is the value of a vehicle determined by depreciation of age, mileage, condition, and other factors used by insurance company claims underwriters. Stated Value is the value determined by you but is no guarantee of the settlement amount if a total loss occur, or the insurance company will pay the lesser of the Stated Value or the cost to repair the covered auto not to exceed the Stated Value.
Why is Agreed Value so important for a collector car and how do I determine its value?
As a collector car owner, only you know how much time and money you have invested in your collector car. You have compared your vehicle to others like it, and feel confident in your knowledge and expertise of that particular type of vehicle that the value you determine for your own collector car is fair. In determining the value of your collector car, keep in mind the time and money you have invested into it, the value of other vehicles like it, and how much you would be willing to sell it for if you were to choose to do so. Unless the amount is obviously unreasonable, the companies will accomodate your figure.
What if I don’t have a collector car policy and my collector car is covered at Actual Cash Value or Stated Value?
As an example, if someone were to have an accident and their $25K collector car covered under an Actual Cash Value policy was considered a total loss, claims underwriters would depreciate the value of their vehicle due to its age, mileage, condition, etc., and the final reimbursement could be far less than the vehicle’s real worth. Where as, if this same vehicle was covered under an Agreed Value policy, the full $25K would be reimbursed to them as agreed upon at the policy’s inception. Also, with an Actual Cash Value policy or Stated Value policy, claims are often handled with the same actual cash value coverage; for example: for a cracked windshield to be replaced under Comprehensive coverage of a regular-use automobile policy, the company may only reimburse enough to replace the damaged windshield with a generic windshield; where as a collector car insurance policy with Agreed Value will reimburse enough for a numbers-matching date-stamped factory windshield, which is an important aspect of replacement parts for collector vehicles to maintain their collector value.
What are the criteria to qualify for a collector car insurance policy?
Every collector car insurance company defines collector vehicles using their own particular criteria. The classification of antique, classic, custom, exotic, modified, special interest, etc, are defined using each company’s own criteria of age, make, model, modifications, and such. What is considered a classic with one company may not fit the same classification under another company’s classic criteria. Generally, a vehicle is considered an antique or classic car if it is twenty years old or older and has been maintained or restored to its original factory condition; classic cars that have been altered from their original factory condition are generally considered custom or modified; exotic and special interest cars are vehicles that are rare or of limited production and may be newer than twenty years in age. One of the many advantages of our Agency is that we know the criteria for each company that we do business with, and can fit the collector car insurance client with the best company that meets their particular needs. We have secured coverage for collector cars of all classifications, from three to one hundred years old.
If my collector car is 100% stock or has modifications such as a bigger engine, different drive train, wheels, custom paint, etc, how does that affect my premium?
Here again, every company is different, which is why we check with all of the companies to ensure we are meeting the client’s particular needs. Some companies will offer less expensive premiums for certain modifications over others, such as modifications for safety-related mechanisms. Knowing which companies do this, along with other classification criteria is another benefit of our Agency, which is why we provide the service of comparison quoting for our clients based on each collector car’s uniqueness.
What exactly is Liability coverage and how do I know how much I need?
Liability coverage is to protect you in case you are at fault or negligent in an accident and people are injured or property is damaged as a result. The Bodily Injury portion of your Liability coverage will cover medical treatment to people injured, either passengers in your vehicle, the driver and passengers of another vehicle, or pedestrians, all of which having been involved in an accident with your collector car. In the same respect, the Property Damage portion of your Liability coverage will cover any physical property that is damaged as a result of an accident involving your collector car; property such as another vehicle, telephone poles, building structures, etc. Even though you may be an excellent driver and never have had an accident, let’s say that another vehicle pulls out in front of you or brakes suddenly, and in order to protect yourself from hitting that vehicle you may cross the center line of the road and hit another vehicle in the process of avoiding the first. Both the Bodily Injury and the Property Damage portions of your Liability coverage would be utilized in that accident. Sometimes these things happen to the best drivers. In all cases where your assets are at risk, you would need at least as much Liability coverage to cover your assets, which include your home, savings, and personal belongings (such as your collector car) which could all be at risk in a lawsuit if you were found negligent. Let’s say the vehicle you hit was an expensive sports-car which was considered a total loss by the claims adjuster. The sports-car could be worth up to $100K, therefore I always recommend carrying at least $100K in Property Damage Liability. Also, I would recommend for clients to carry an Umbrella policy, a separate entity from your Collector Car Insurance policy that is in excess of their collector car, regular-use automobile, and homeowner’s insurance policies’ Liability limits. So, if all of your assets are worth $500K or $1M, you would need the Liability protection of an Umbrella policy in that amount to not be at risk of losing your valuable assets.
What is the difference between Combined Single Limit and Split Limits of Liability?
With a Combined Single Limit of Liability, the amount of coverage is the most the insurance company will pay for the total of all damages resulting from any one accident, to include Bodily Injury and Property Damage. With a Split Limit of Liability, the amount of coverage designated for ‘each person’ is the most they will pay for all damages due to Bodily Injury to any one person; further, subject to the ‘each person’ limit, the amount of coverage designated for ‘each accident’ is the most they will pay for all damages due to Bodily Injury sustained by two or more persons in one accident; and the amount designated for ‘property damage’ is the most they will pay for the total of all Property Damage as a result of one accident. Here again is another reason why it helps clients to let us do the searching for them, because every company is different in their coverage choices, and although one company may be less expensive in premium, they may not be able to adequately provide your Liability coverage.
Why do I need Uninsured & Underinsured Motorist Liability coverage?
Uninsured Motorist Liability coverage pays damages for Bodily Injury claims that you are legally entitled to recover from the owner or operator of an uninsured vehicle. Underinsured Motorist Liability coverage pays damages for Bodily Injury claims that you are legally entitled to recover from an owner or operator of a vehicle whose limits of coverage are less than the limits for your policy’s Underinsured Motorist Liability coverage. Another type of uninsured coverage is available in instances where Collision coverage is not purchased as part of the insurance policy; Uninsured Motorist Property Damage coverage protects against damage to any vehicle insured under the policy and pays under the same circumstances as Uninsured Motorist coverage.
What is the difference between Comprehensive and Collision coverages?
Comprehensive coverage protects your collector car from losses resulting from damages that are not due to a collision; such as glass breakage, tree limbs, hail, fire, theft, or vandalism. Collision coverage protects your collector car against losses resulting from a collision with another vehicle or another object.
Should I have a Comprehensive and Collision deductible?
Again, this is why we offer comparative quoting with all of the companies for you; some offer deductibles and some do not. The companies that do have deductibles available may lower your premium; however, there are companies that have zero-dollar deductibles that may offer less expensive premiums than using one with a deductible; as mentioned before, this is based on the uniqueness of each collector car.
Why do collector car companies not offer ‘layover’ or six-month policies allowing for premium savings during the winter months?
Actual collector car insurance policies offer you a lower rate for twelve months of coverage than a regular-use automobile policy does for a six-month term. To be honest with you, if you have a policy with a ‘layover’ period, it is not an actual collector car policy. Collector car policies not only save you money in yearly premiums, they also provide you with year-round coverage, allowing you the freedom to take your car out in the winter months to get work done at the body shop or to take advantage of a nice winter day. Why take a chance in a situation like that when a twelve-month collector car policy will most probably be less expensive and will allow you year-round availability? If you do not have your collector car covered with an actual collector car insurance carrier, and still have it covered with a regular-use auto insurance policy, I feel you are at a real disadvantage because of some of these issues. It is my opinion that you should not have your collector car insured on the same type of policy as your regular-use automobiles. The six-month type of coverage is an outdated method that used to be available years ago before actual collector car insurance policies became available.
If I go to a car show event at a race track and I run my car down the quarter mile track just for fun, does my collector car policy provide coverage?
Unfortunately, collector car companies will not provide coverage for any vehicle while going down the racetrack, whether it is for fun or an actual drag/race event. We do, however, have a company which specializes in coverage for race vehicles and their trailers. It is a separate type of policy coverage that insures the vehicle while it is stored, during transportation to and from the dragstrip/racetrack, and while loading and unloading from the trailer. The coverage stops while on the dragstrip/racetrack.
What if I travel out of state with my vehicle?
Collector car insurance companies provide coverage wherever you are throughout the country; generally, claims are processed through the main offices of each company.
What about mileage limitations?
Many collector car insurance companies have no mileage limitations, provided the collector car is not used on a daily basis for regular-use needs. Some companies do have limitations and will request odometer readings each year upon renewal.
Is coverage available for collector cars during restoration?
Coverage is provided by most collector car insurance companies and is dependent on the stage of completion which the vehicle is in; most companies prefer the body, chassis and engine to be complete, while others will cover a collector vehicle that is 50% complete. Again, our Agency will check with all of the companies to find the best coverage for each client’s particular needs.