Is my car a classic or just old? Broadly speaking, classic cars are “fine” or “unusual” vehicles between 25 and 50 years according to The Antique Automobile Club of America. As a classic car enthusiast, many collectors may not realize how important it is to secure the appropriate insurance coverage for their four wheeled pride and joy.
2017 saw the highest classic car sell-through rate since 2011 with average sale prices up 2%. Classic car prices ranging from the thousands to the millions make it seem like just a passion, but many times owning a classic car evolves into a personal investment. 2017 also marked the first time that Gen-xers and millennials owned as many classic cars as the generations that came before.
There are three ways to insure a class car 1) Actual Cash Value, 2) Stated Amount or Stated Value, and (3) Agreed Value.
Actual Cash Value or ACV is the most common type of coverage. In a total loss situation an adjuster will determine the worth of your car just prior to the loss (less depreciation and any applicable deductible) and determine the amount you will be paid for your car. There is often some subjectivity and negotiation involved.
Stated Amount or Stated Value is provided with documentation when a vehicle is originally added to a policy. In the event of a total loss situation the adjuster will either pay the stated amount or the actual cash value (whichever is less) and any applicable deductible. This is often misleading because Insureds think they will automatically be paid the stated amount or stated value.
Agreed Amount or Agreed Value is recommended because there is no negotiation or surprise in a loss situation. With Agreed Amount or Agreed Value, at the time a vehicle is added the carrier may require photos, appraisals, or receipts and a value will be agreed upon ahead of time. The agreed value will be listed on the policy and that value is what will paid to you in the event of a total loss, subject to any applicable deductibles. Agreed amounts can be updated throughout the year if values spike with underwriter review.
Additionally, with an Agreed Amount or Agreed Value policy, there are varying options when, for sentimental reasons, you prefer to restore your classic car instead of being paid out in a loss situation.
Examples of Agreed Value covering restoration
A collision nearly totaled a policyholder’s Ferrari Enzo – one of only 400 that were ever made. The extensive damage would require lengthy and complicated repairs. The carrier offered to reimburse the policyholder for the full value of the vehicle, but due to its rarity he preferred the carrier attempt to repair it. The design intricacies made it nearly impossible to find a qualified technician and replacement parts nearby. The carrier determined the only technicians equipped to complete the repairs were the original builders – at the Ferrari manufacturer in Italy. The carrier shipped the car, and the policyholder was flown to Italy twice to inspect the progress. Once all repairs were completed, the vehicle was shipped back to his residence – good as new.
A fire occurred in a client’s garage after a heater malfunctioned, causing extensive smoke damage to several of the client’s classic cars. The carrier gave the client the option of either accepting a total loss settlement or having the cars restored and repaired. Because the cars had significant sentimental value, the client decided to restore them. The carrier stepped in immediately and sent an expert in smoke damage remediation from another state to evaluate the damage, and the cars were carefully returned to their original condition.
In addition to insuring your vehicle with Agreed Amount or Agreed Value, there are additional recommendations to safeguard your personal investment:
Keep all appropriate documentation for the value of your vehicle to prove the condition of your classic car, including all regular maintenance. If possible, include pictures and receipts of any parts, features or accessories.
Keep your classic car in a garage away from items that may fall on your vehicle.
Check your annual mileage limits, as often mileage and usage is limited on classic cars.
Check your coverage prior to a planned restoration.
Periodic appraisals are recommended to make sure the vehicles values are current and up to date with the market.
Working with an experienced broker is recommended to obtain the most competitive pricing. It is not recommended to add your classic car to your normal insurance without a review as the policy you have may not provide the coverage you expect.
Our Brown & Brown Private Client Advisors understand the importance of ensuring your assets are protected. Interested in learning more about the Brown & Brown suite of solutions? Contact us today, to schedule your complimentary insurance review.
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