Why You Should Have Collector Car Insurance:

[Reprint from Hemmings Motor News]

Introduction: Collector car insurance is a special value benefit available for those who qualify, both owners and vehicles. Such insurance is much less expensive than regular daily-driver coverage, and the approach taken by the insurance carriers is interesting as well as innovative.

We will review the qualifications, describe the coverages, note the limitations and discuss some extras. We'll cover costs on a broad-brush basis and provide a few tips for collectors considering applying for this coverage.

Collector Car Defined: A collector car is one which will see limited usage and is expected to increase in value over time. Generally it is also old; a classic (at least 15 years old) or antique (25 years or older). In MA it must be at least 25 years old. A few current-year cars also qualify: limited production, high-priced and/or exotic. The car must be in limited use (no daily drivers), generally less than 2,500 miles per year. It must be garaged, and the type of garage is important. A far corner of the barn or warehouse is not the same as a well-built, fire-resistant (or fireproof) heated and lighted, secure garage. In addition, there must be evidence of other cars owned and operated as daily drivers to support the collector car claim. Finally, the owner must meet requirements as well. A poor driving record, DWI convictions, etc. will disqualify an applicant.

Types of Coverage: Your normal daily driver is covered by an ACV policy. ACV or Actual Cash Value is defined as replacement cost less depreciation. Since collector cars appreciate rather than depreciate the ACV approach won't work. An alternative, used sometimes for collector cars is the Stated Value approach whereby the owner states the value of the vehicle and, in case of loss, the insurer pays up to that value. Note that this approach leaves room for evaluation of the claim by the insurer who may then actually pay less than the stated value.

In most states and provinces, specialty insurers are able to offer Agreed Value coverage which guarantees the full insured value of the collector vehicle. In other words, you and the insurer agree up front on the value of the vehicle, and this amount is written on the declarations page of your policy. In the event of a total loss, the company is on the hook for the agreed amount - period. What's more, most specialty providers offer this coverage on unmodified (stock) vehicles with zero ($0) deductible. The value established must be reasonable and well supported. An appraisal by a qualified and certified appraiser is a great way to go, in fact is a requirement in many cases. Price-guide data from several such guides is better than a single report. The point is, value should be established by some impartial and credible source.

Some states and provinces may require insurers to use state-mandated forms, prescribed by Insurance Bureaus. These forms do not provide for an Agreed Value settlement option. They allow three options: cost of repair, actual cash value, or the amount shown on the declarations page. Insurers doing business in these states and provinces generally settle total loss claims based on the amount shown on the declarations page. In effect, this is the same as the Agreed Value approach. But insurers are specifically prohibited from using the term "Agreed Value" in any advertising or promotional material.

Who Provides? There are several major national insurers, some have specific plans designed for the collector vehicle.

Limitations: There are several limitations applicable to CC policies, some already mentioned above. Not all insurers impose all the following, so you should check with each company about what applies to their policies.

• Mileage: generally 2,500 miles per year maximum.
• No daily driving (commuting, etc.).
• No commercial use - of any sort, including advertising.
• Must be garaged; quality of garage is a consideration.
• Modified vehicles may qualify, but will be subject to higher rates.
• Exclusivity: If your car was celebrity-owned, or is of historical significance, you must support your claim with documentation.

Deductibles: Some policies have zero deductibles. And a few require deductibles. Deductibles, of course, reduce premium costs, so you may wish to explore this option. Common deductibles are $250, $500, and $1,000.

Optional Extras: Some firms offer options such as roadside assistance plans and extra coverage during transport. Some offer an inflation index and spare parts coverage. Check with each firm when applying, to see what's available.

Cost: As you might expect, costs vary with the value of the vehicle, but the other considerations mentioned previously count heavily. Typically, annual premiums are in the range of $150. Some lower-value cars may be insured for under $100; conversely, really high-value cars will require premiums of $600 to $800 annually.

Tips for Collectors: Before applying, prepare with care, beyond the basic data of make, model, year, VIN, title and description. Gather the following:

• Provide a complete set of photos from all sides.
• Document value with sales invoice, appraisal or price guides.
• Provide photos or other supporting documentation of the storage space.
• Provide a copy of your driver's license, or at least the license number (yes, they check).
• Provide a list of other vehicles owned, with documentation (titles, registrations, etc).
• Prepare a list of questions or issues that are not clear to you, and be sure to get complete answers when you talk with each firm.
• If you have internet access, try the on-line quote features where offered. Then follow up with personal contact and your backup documentation.