Think about your car for a moment…what words come to mind? Hopefully words like safe and comfortable, and maybe luxurious, practical or fast depending on your preferences. This newsletter is about collector cars and for most collectors their first word is fun.
Let’s first organize vehicles into a few buckets:
Standard
Cars with original MSRP below $100k that are used for daily driving and expected to depreciate.
High Value
Cars with original MSRP above $100k that are used for daily driving and expected to depreciate.
Collector
Cars that aren’t used for daily driving and not expected to depreciate. Includes certain “exotic” cars (high-powered later model high-value cars with an unusual look like Lamborghini, Ferrari, McClaren) and certain “classic” cars (30+ years old, restored, part of a collection, limited production).
Recreational
ATVs, UTVs, sand rails, golf carts, motorhomes, motorcycles.
Insuring Collector Cars
Let’s look closer at protecting collector cars…insuring them with a standard auto policy is a mistake. Collector cars aren’t expected to depreciate but standard auto policies depreciate value every year. Collector cars aren’t driven much but standard auto policies price for more frequent driving. Standard auto policies have features like rental reimbursement that you don’t need on your collector car. Standard auto policies on collector cars provide too little coverage at too high a cost. You need your collector car to be properly identified and insured.
Collector Car Policies
Collector cars can be insured with specialty stand-alone policies (e.g. Hagerty) or as part of your existing policy (e.g. Pure, Chubb). Hagerty can be engaged directly but it’s always best to work through your insurance agent, so they can integrate your coverage and limits (no additional cost to you). In general, collector car policies provide:
- Agreed value (amount of property coverage is in your contract, not dependent on depreciating “Blue Book”)
- Lower premiums to account for low miles driven
- Original equipment manufacturer parts, and special fabrication if parts aren’t available
- Enhanced service to help with difficult repair issues
On Track With Collector Cars
Years ago insurance policies prohibited racing. Policyholders got around this by putting their cars on tracks and denying they were racing. So policies, including collector car policies, now deny coverage for any on track activity.
But there are insurance agents that now can provide a special policy that protects your car for those days you are on the track with your collector car. You still can’t race…but you would be covered if testing or at driving schools for example.
Protecting Collector Cars
Here are some basic protection steps…don’t underestimate rodents…I’ve had several claims due to those nasty critters:
- Clean and safe storage
- Keep all documentation
- Research and document history
- Take photos
- Employ qualified maintenance
- Drive occasionally to lube and check
- Drain and rodent protection for extended storage
- Properly insure
Collector cars are both valuable and fun. And collector car owners usually have an emotional connection with their cars. So protect them the right way.
Carrie Babij is President of Desert Insurance Solutions – with offices in La Quinta, California and Scottsdale, Arizona – and has more than 25 years’ experience with high net worth personal and commercial lines of insurance. For more information, contact Carrie at carrie@desertinsurancesolutions.com.
