How to insure a classic or collector car

The problem with putting a collector car on an ordinary auto policy is the valuation clause. A standard policy pays actual cash value after a total loss, and it arrives at that figure from depreciation tables and comparable sales of ordinary used cars. For a thirty-year-old pickup that has had a bare-metal restoration, or a numbers-matching muscle car, the table produces a figure that bears no relation to what the owner paid or what the car would fetch at auction. The claim is then an argument about worth, conducted after the car has been destroyed.

Collector car insurance exists to remove that argument. The owner and the carrier agree the car's value when the policy is written, and that figure is what a total loss pays, without depreciation. In return the carrier limits how the car is driven and where it is kept, because a car that sits in a garage and comes out for shows and Sunday drives is a very different risk from a commuter. The premium reflects that, and is often a fraction of a standard policy on the same value. This guide is the sequence for getting a car onto such a policy and keeping it there, written for owners in Arizona, Nevada, Utah and Idaho, where dry climates and long car-show seasons make the hobby common.

What to gather

The application for a collector policy asks more about the car than a standard one, and the answers set the value.

• The title and registration, including any classic, historic or collector plate the state has issued.
• Photographs of the car: exterior from each corner, interior, engine bay, undercarriage if you can, odometer, and the VIN plate.
• Receipts and records for the purchase, the restoration or modifications, and recent maintenance, with dates.
• A recent professional appraisal if you have one; for higher values the carrier will ask for one, and for lower values good photographs and sales comparables may be enough.
• Details of where the car is kept: a locked private garage, a shared garage, a storage unit, a carport, with photographs.
• Your regular-use vehicles and their policy, because most collector carriers require every licensed driver in the household to have a daily driver insured elsewhere.
• An honest estimate of annual mileage and what the car is used for: shows, club events, pleasure drives, occasional errands.

Step one: check that the car and the household qualify

Collector carriers define what they will write. Age is the usual gate, with a car needing to be older than a stated number of years, but many carriers also write newer limited-production or exotic cars, modified cars, restomods, vintage motorcycles and even classic trucks and military vehicles, each on its own terms. The car must be in good condition or under active restoration; a project sitting under a tarp is a different product. Ask before assuming a car is too new or too modified.

The household matters as much as the car. Most collector carriers require that the car not be anyone's daily driver, that every driver in the household has another insured vehicle for ordinary use, that the car is garaged in a locked structure when not in use, and that the drivers have clean or nearly clean records. A young driver in the household, a car that must be parked outside, or a plan to drive the car to work will each disqualify the application with some carriers and raise the premium or add conditions with others.

Step two: set the agreed value carefully

The agreed value is the number the whole policy is built on, so it deserves the most thought. Set it at what it would cost to buy a comparable car in comparable condition today, which is neither the purchase price years ago nor the sum of the restoration receipts, since restoration cost and market value are different things. Use recent auction results, marque club valuation guides and dealer listings for the same model, year and condition grade. Where the value is substantial, a written appraisal from a specialist who knows the marque is worth paying for and may be required.

Read the definition of agreed value in the policy and distinguish it from stated value. A true agreed value policy pays the agreed figure on a total loss, full stop. A stated value or stated amount policy pays the lesser of the stated figure and the actual cash value, which reintroduces the depreciation argument the collector policy was meant to remove. Some carriers use the phrases loosely; the policy wording is what counts. Review the value every year or two, and after any significant work, because collector markets move in both directions and a policy written to a value from five years ago is either underinsured or overpaying.

Step three: read the usage rules and match them to reality

Every collector policy restricts use, and the restrictions vary widely. Some carriers impose a mileage cap and ask for an odometer reading each year; others have no cap and rely on the requirement that the car is not a daily driver. Nearly all exclude commuting, business use, racing and timed events, and some exclude driving to work even occasionally. Storage conditions are written into the policy: a locked garage, sometimes a specific address, and coverage may be reduced or excluded if the car is left outside overnight. Some policies restrict who may drive, to named drivers only.

Choose the policy whose rules match how you actually use the car, rather than the tightest set of rules you think you can live with for a lower premium. A claim after a crash on the way to a Saturday errand is paid or denied on the policy's definition of pleasure use, and an owner who exceeded a mileage cap by a wide margin has given the carrier a reason to look hard at everything else. If you take the car on long tours or drive it more than a typical collector, say so and buy the policy that allows it.

Step four: choose the extras that fit

Collector policies come with options that standard policies do not, and some are worth taking.

• Spare parts coverage, for the engine on the stand, the original wheels in the loft and the parts collection, usually at a modest limit that can be raised.
• Automatic increase in value for a car under restoration, so the agreed value rises as work is completed, up to a stated ceiling, with photographs and receipts sent in periodically.
• Flatbed towing and specialist roadside assistance, because a classic on a hook is a damaged classic.
• Trip interruption, paying lodging and transport if the car fails on a tour far from home.
• Coverage while the car is in a shop for work, and for a trailer used to transport it.
• Liability limits that match your other vehicles, and the ability to schedule the car on a personal umbrella. A collector car in a crash causes injuries like any other car.
• Coverage at shows, in transit to them and, for some carriers, while on a track for a non-timed driving event, which is otherwise excluded.

Common mistakes

Collector claims go wrong in a small number of predictable ways.

• Leaving the car on the household's standard policy, and finding at the total loss that the carrier's book value is a fraction of the restoration cost.
• Setting the agreed value at the restoration receipts total, or at the purchase price from a decade ago, rather than at today's market.
• Buying a stated value policy believing it is agreed value.
• Using the car for occasional commuting or errands in breach of the pleasure-use definition.
• Failing to tell the carrier about a change of storage, a new driver in the household, or a teenager getting a licence.
• Never updating the value after a market rise, so the payout on a loss is what the car was worth years earlier.
• Forgetting the car when the umbrella policy lists underlying vehicles.

A worked example

Suppose an owner in Mesa keeps a restored 1969 pickup in a locked garage and drives it perhaps two thousand miles a year to shows and on weekend runs; the household has two daily drivers on a standard policy. He paid $18,000 for the truck and put $30,000 into the restoration. A marque specialist appraises it at $55,000 in its current condition. On his standard policy, comprehensive and collision on the truck cost say $900 a year and would pay actual cash value, which the carrier's tables put around $12,000. He moves it to a collector policy with an agreed value of $55,000, a pleasure-use definition with no mileage cap, spare parts coverage of $2,000 and flatbed towing, for $600 a year, and adds the truck to his umbrella. Three years later a fire in a neighbour's garage spreads and destroys the truck. The collector policy pays $55,000 with no deductible and no depreciation argument. The standard policy would have paid $12,000 less a deductible. The figures are illustrative.

How to use this

Bring us the photographs, the records and the appraisal, and tell us how the car is used and stored; we place it with a collector carrier we represent in Arizona, Nevada, Utah and Idaho whose usage rules fit, at an agreed value the market supports, and we make sure the household's daily drivers and umbrella line up with it. A car that genuinely is a daily driver belongs on a standard policy, and if that is the case we will say so rather than write a collector policy that would not pay.