The right auto insurance for your classic car

Classic cars have a style and distinctiveness you rarely find in modern vehicles. If you own an antique on wheels, you need a car insurance policy that meets its needs.

Classics – sometimes defined as cars at least 25 years old – need special care. Many owners drive them only for pleasure, using less important cars for daily commutes to work.

"The collector car should be under a roof," says Jill Bookman, CEO of Cherry Hill, N.J.-based American Collectors Insurance. "This is the fun car that stays in the garage for the most part, the sentimental car. It's not something you would use on a regular basis."

Get free custom rate quotes online, now.

Unlike standard cars, true classics appreciate in value. If your car is a collectible, consider buying a separate classic car insurance policy.

Classic car insurance explained

While many collectors prefer foreign vehicles, America boasts its share of classics. From the 1930s through the early 1960s, Detroit automakers used streamlined airplanes as visual models. Many of the vehicles became cultural icons.

Not everyone agrees on what constitutes a classic car, however.

"The baseline is something that held its value and will appreciate over time," Bookman says. "If the car owner would rather drive the car to the far end of a parking lot rather than risk any dings, that is a good sign."

Classic car insurance policies can protect these jewels.

"Anyone with a classic car needs to approach insurance as a specialized product, probably from a specialized insurer," says David Snyder, vice president and associate general counsel for the American Insurance Association trade organization.

Classic car owners who insure their vehicles on standard auto insurance policies may not realize they are paying too much for insurance protection. If you agree to annual mileage restrictions, your classic car insurance typically will be less expensive than standard auto insurance.

That's because insurers know that vehicles receiving care and attention are less likely to be damaged. Collectors don't take unnecessary risks.

In addition, "the liability exposures are far less than you would have for a typical car," Snyder says.

On the other hand, the potential for repair costs is much greater. In some cases, parts may need to be made or you may need to hunt for original parts, Snyder says. When you compare car insurance quotes, ask about how damaged parts will be replaced.

Shopping for classic car insurance

When shopping for a classic car policy, make a standard car insurance quotes comparison. Look for policies that cover all the basics, such as collision, comprehensive, liability, uninsured motorist and personal injury protection.

Because classic cars often increase in value over time, make sure your insurance policy reflects price appreciation. Some policies contain an automatic value appreciation feature. If you choose a policy without that feature, review it once each year to make sure it offers adequate protection.

"There basically are three different types of coverage," Bookman says.

They are:

• Actual cash value. This is the most common type of coverage for all cars, largely because many classic car owners are not aware there are more appropriate policies for people with older vehicles that appreciate in value, Bookman says. In the event of a claim under an actual cash value policy, the value will be depreciated and you will pay a deductible, she says.
• Stated value. With these policies, insurers are obligated to pay up to the stated amount. In some cases, the insurance company actually may pay less, says Jonathan Klinger, spokesman for Hagerty Insurance, a classic car insurance company based in Michigan.
• Agreed-value. In the event of a total loss, the insurance company is on the hook for the entire amount agreed upon by the company and the policyholder. "The value is established upfront," Bookman says. "It provides the collector with real peace of mind."

Insurers of classic cars may make other stipulations. In addition to agreeing to limit the number of miles you drive, you may be required to house your classic vehicle in a garage.

The amount of savings you will realize can vary widely, depending on the make and model of your car and the insurance company. Bookman says her company's average premium is $200 per year.

There are many pricing guides available to help you determine your classic car's worth. If you've made improvements to your car and believe it has increased in value, consider hiring an appraiser who can verify the amount.