Have you recently purchased or restored a classic car? Depending on your car’s make and model as well as a number of other criteria, you may find a broad range of insurance rates — anywhere from several hundred dollars to tens of thousands in annual premiums.
Most “antique” cars — loosely defined as vehicles at least 25 years old — are insured under specialized collectible insurance. As a general rule, this type of insurance is considerably cheaper than traditional auto insurance, as most people use these cars only for leisure travel and auto shows.
“It’s not the vehicle that you’re taking your kids to school in,” says Jonathan Klinger, a spokesman for Hagerty Insurance, which insures collectible cars. “It’s the fun car that you don’t have to have.”
When insuring cars as collectibles, some insurance companies set mileage limitations, such as no more than 3,000 miles a year. Hagerty doesn’t impose such restrictions, but does require that the car owner have another vehicle and cannot use the collectible for “daily use.” Classic car insurers also typically require that owners keep their vehicles in a garage or locked building when not in use. Drivers may be able to get discounts by undertaking additional security measures, such as setting up a sprinkler system for fire protection or installing an alarm system.
Some highly restrictive policies offer the cheapest coverage of all.
“Allstate offered me an option for storing my cars at a rate of about $15 for six months,” says Ron Sturgeon, a classic car collector from Haltom City, Texas. “You could only take them out twice per six-month period … and could only drive them a limited number of miles.”
Actual cash value and agreed value
Unlike regular auto insurance policies, which are based on “actual cash value”—meaning the market value of a comparable car at the time of a loss — policies for antique cars are based on "agreed" value.
“When the policy is written, both the insurer and the policyholder agree on a value for the car,” Klinger says. “If the car is totaled, you’d get a check for that entire amount.”
The reason? While modern cars tend to depreciate in value with age and use, collectible cars usually do the opposite. “Around 99 percent of antique vehicles hold their value or increase in value,” Klinger says.
How insurance rates are calculated
Because owners of collectible cars tend to take fewer risks with their vehicles and the drivers generally are older, insurance rates for these cars often are much lower than they would be for modern cars. “The average premium is around $300 a year for the cars that we insure,” Klinger says. Still, the more valuable the car is, the higher the insurance costs will be.
Classic car insurance rates consist of a liability charge, which normally is $100 to $150 a year, as well as a component tied to the car’s value, minus any discounts. In general, 60 cents per $100 is the starting rate for calculating premiums, but discounts could drop that rate as low as 25 cents per $100.