So Let's Talk Classic Car Insurance for a Moment!

[buick man]

It is getting that time of year again, when the doors are open, the birds begin to sing and your proud collection sees the light of day.

So now, you may think that you have the ol question of Classic Car Insurance down good and tight and really don't bother with thinking about it other than the rate your paying is low and that makes you happy.

But what are you buying with that low premium? Like the old horse traders use to say, " So are ya a buying somethin fer nothin or are ya a buyin nothin fer somethin - Boy?" .... at least they did in this old movie I saw once.

Well with insurance these days, especially health insurance, we don't think anyone out there needs a seminar explaining just how were all getting less and less it appears, for more and more these days - Now do we?

Now with Classic Car Insurance, we thought it best if some things were pointed out so you can evaluate your policy a little closer.

One of these pesky little vermits that may come back to bite you has to do with the agreed value to total loss ratio. Also there is a difference between an evaluation and a valuation when it comes to an appraisal. There are appraisal terms such as "Cost to Cure", Cost to Build etc. that come into play here.

Stop and think about some of this for awhile. Let's say your house burns down tomorrow and as most fires will do, it ruins your foundation due to the heat. Now what is the dollar amount of loss of your house worth to you so you can recoup that loss? Is it to be based upon the current market, based on recent adjusted comparable sales within your area minus the current adjusted market value of the land on which it is built upon?, Or perhaps your loss is best equal to what it would cost to rebuild it to pre fire conditions? You can easily figure that one out. These two results, will tender widely different final amounts. Which you may or may not be happy with in the end. After all when you buy insurance by definition, are'nt you insuring your asset against your potential for a loss, and not if the market value is going to go up or down? That value is founded on a cost basis.

This does and should hold true as well with your Classic Car Insurance Policy. It goes something like this. So cars like yours have been selling recently for around X number of dollars give or take. So, you find an appraiser that comes out and "Appraises" your classic based upon a comparative market approach and comes "up" with a final determination of current market value. You take this to your insurer, and insure your car for that amount. That amount again, based on the result of a current at the time of appraisal comparative market determination of current value.

Now let's say you have a loss occur to your classic vehicle. Well if you have been a player in the game of car collecting and restorations for any length of time and are worth your salt, then you no doubt realize that more often than not, your car would cost more ( A lot More) to restore than the comparative market would be willing to give you for it in an "arms length" sales transaction. BTW, were not talking about a complete rotisserie job either here. Just what it would take to bring it back from the mat and fix it back to normal once again. This being in pre loss condition as based on the condition at the time of your initial comparative market appraisal. Well this is the point where things just seem to start rolling downhill and going south as they say. Insurance companies need at some point to minimize their outputs (losses) and reinforce their balances (inputs) as much as possible. This is where that value to total loss ratio comes into play.

Now, let's say you insure your classic based solely upon an appraisal based on a comparative market analysis. These are fleeting by nature and temporary since they are based upon the here and now as of the date of the appraisal. Also that market appraisal is many times forced to use widely sweeping and arbitrary adjustments to come to a final basis of adjusted current value or more accurately, a Guesstimation of Value. So your gem of a classic is appraised at say, $ 22,000 and so that is what you insure it for. O.K. Done. So, and we assume here you know, it does not take that much damage these days to have things start to add up real quick and begin to approach that $ 22,000 appraised value amount. Right? Well, the insurance companies realize this as well and usually have a total loss amount based somewhere in the neighborhood of around 70% to agreed upon value based on that appraisal you have give or take - So we have been told. So what if the "Sales Market" takes a dive in the third round laying flat on the mat? Do you think at this time that the restoration shop is suddenly going to have the ability to adjust costs as linear to that of the fluctuating Sales Market and take a dive as well in the cost of labor and parts? If you think so, than think again. Well of course if the knock out economy stays that way for long enough then you would most likely be spending your free time living in your classic rather than polishing it and would have a whole new set of priorities and problems to say the least.

But back to reality. Now what if you based the Value of your collectable instead initially upon the Cost Approach to Value utilizing the Cost to Cure basis of appraisal or the Cost to Repair and make whole once again. This is called a Cost Basis Appraisal. This is how they determine your house lot value by since there are usually not that many lots hanging around for sale comparisons. It is an extractive process but very accurate. The house's base value is determined by the Cost Basis and the contributing land value is extracted from that using market sales of finished "Like" properties. So too, this can easily be done with your classic's determination of value. In other words, what would the current value of your collectable be worth if you based it not on the market approach alone, but upon what it would cost starting with a basic # 5 or #4 vehicle? There are a lot of them out there to be sure and the bottom of the market is never a mystery value. You take this as a basis and then numerically "improve" upon it on paper, up to the point and level and state of condition and correctness your collectable is actually in based on current shop rates, time estimate factors to cure and parts/material costs. All of which is based upon the accepted level 5 to 1 grading scale used today in the hobby. Say you own a #3 driver or #2 garage queen as many of us do. Approaching your appraisal determination of value in this manner leads to more readable and reliable conclusions. Because we know by definition, the Market Sales Approach analysis is going to have a different final adjusted value when compared to the determined final value based upon the Cost Basis and Cost to Cure Approach.

You do now see where this going, right? The Comparable Sales Market approach uses many more and different adjustment variables, many arbitrarily based than the Cost to Cure and Evaluation approach does to come to a final current value. It is also called current value as opposed to current market value. Market value can be effected up or down by many factors outside of your control at any given moment than a value based on what it would Cost to Cure or As Build your vehicle. Yes of course there are factors that effect the Cost to Cure or As Built approach as well, but not nearly as sweeping as those effecting a Market Approach to valuation. Because when you go to have your classic "Cured" at the repair shop your not going to be asking anyone what it's now "Worth" to repair it. No, we think your going to be asking what is it going to "Cost" to repair it! Don't you?

So what to do. You have your Market Value appraisal in hand for what it's worth, and you are going to go get your classic car insured. Remember it does not take that much to approach that somewhat mystical and precious 70% totaled loss ratio amount by your insurance company. So are you going to insure your car based on the possibly low basis of that market approach appraisal alone or are you going to Evaluate the current condition status of your car and start adding or subtracting as needed based on shop rates and parts costs to establish a truly accurate and realistic final "Worth" of your classic, then insure it for that amount instead? Because if you think about it, that is what you are going to end up doing when any claimable loss occurs anyway. Most likely that so-called market valued appraised $ 22,000 dollar classic sitting in the garage right now is more likely easily a $36,000 classic sitting in your garage right now. Think about it than insure it accordingly. You are not over insuring anything. You are not cheating. You are simply Accurately and Properly insuring your vehicle for future potential loss of both current true cost of ownership, value and utility just like when your house burns down. That way if and when that loss should occur, the basis value is a realistic one and you won't have the insurance company totaling your perfectly repairable vehicle just because you are in that easily obtainable and dare we say somewhat mystical 70% plus range of loss to value ratio.

Moral of this Story: Don't go sleep walking around thinking they "Gotcha covered". Insist that a Cost Approach Appraisal be made on the car as well as the Market Approach Appraisal. Both resulting determined values can then be what's called Reconciled to determine a true basis of value and that is the figure you go on and take to the insurance company, otherwise you are setting yourself up for the hit. Of course, you have to find an Appraiser that is actually trained & qualified to do this and not just some guy who can't either sell cars, insurance, paint or repair cars anymore so he is now an "Appraiser" with a camera and a note pad. By the way, regarding your home owner's insurance policy and fire insurance policy, these policy values are most likely based on the Cost to Cure or Cost to Build not the Current Market Value of your house! Check that out as well and see what is up and see if I speak with forked tongue or not you old horse trader you!

copyright 2012, by DDG aka - buick man

Edited March 11, 2012 by buick man (see edit history)

[Bhigdog]

Both Heacock and Hagerty don't require an appraisal. They require 4 good pics and some requirements as to mileage, usage, where it's garaged etc. You and they agree on a value that the car will be insured for and that's what they will pay for a total loss or needed repairs. As far as I can tell no one will insure it for very much more than it will take to replace it. When I wanted to insure some of my cars the company balked at first at the amount I wanted to value them. When I said they were used for show, were trailered, and were AACA Seniors and Grand National winners the underwriter said the amount I wanted was fine ................Bob

Edited March 12, 2012 by Bhigdog (see edit history)

[buick man]

Bob: Great thoughts as always from you. .... And someone replied to my post too. Thanks! Cause I wanna beat this around a bit and have some fun with it too.

Well I posted this because the companies that insure classics, all use price/buyer guide references of one form or another. They may not make a stink about it at first when insuring IF it falls into these arbitrary sales priced data sources they use. These references are ALL based on Sales from data sources from listings, auctions etc. The problem with car sales is that few documented sales are kept. So a lot of "extraction" comes from the previous asking price as often the actual sales price is unobtainable or you won't get your phone call returned to you from the seller when attempting to make a verification. This is unlike a concluded home sale since it is recorded at your county recorders office and some of the sales terms can be extracted from this as well to make sure it was indeed a "arms length " transaction.

Bob, your company bulked at first because they were looking at their sales data sources and you were looking at your trophy shelf. But the point of my dissertation, was to illuminate the very potential pitfall for all who insure their classic cars. A lot of us do not own trailer queen clean dream machines but have invested lots into our restorations just the same. The problem arises when only the sales approach has been used as the basis to bracket the stated value amount which by definition is arbitrary, without considering the true and hard costs to replicate the classic to it's current state of condition. In your example, you attempted to give additional support to your carriers subjective sales valuations with club awards and such. This is known as contributing value factors and is often more than not, arbitrary as well.

All of which will not be a problem until you have a loss. True if you gave them a value & one they agreed upon, how then did you arrive at that amount and does it indeed cover your potential for a write off loss if things start to enter that 70% loss range discussed above? If so then your good to go. Also please note, that those "contributing" value factors you insisted upon when insuring for a greater value may go up in smoke once the car is damaged and no longer may apply, such as originality, original paint, condition even after proposed repairs are made etc.

Anyone want to discuss this chime in!

[Bhigdog]

I used to insure with Hagerty. My 6 cars cost $2000/yr with them. Three years ago I switched to Heacock Classic. My current bill is about $1400/yr for the EXACT same coverage, and believe me I went over the coverage line by line item by item before I switched. Heacock was bit more liberal with their allowed usage also. I've never had a claim with either so can't comment on that aspect. I gave Hagerty a chance to match or come close to Heacocks price but they weren't interested. It might pay others to shop around...........Bob

[avgwarhawk]

I called my State Farm agent. I'm covered for what I paid for the vehicle. Policy is $200.00 for the year. He took pictures of the exterior, interior and engine.

[buick man]

I called my State Farm agent. I'm covered for what I paid for the vehicle. Policy is $200.00 for the year. He took pictures of the exterior, interior and engine.

We think that State Farm is not writing "Agreed Value" policies as discussed above, but rather Stated Value Policies. You definitely want an Agreed Value policy on your classic ride. Covers way more (but with use restrictions) than the Stated Value Policy ever will. OK for your grocery cart car but not for covering a classic car :eek:

[avgwarhawk]

We think that State Farm is not writing "Agreed Value" policies as discussed above, but rather Stated Value Policies. You definitely want an Agreed Value policy on your classic ride. Covers way more (but with use restrictions) than the Stated Value Policy ever will. OK for your grocery cart car but not for covering a classic car :eek:

The car is covered for what I asked. There is no blue book value on the car. I can get the agreed coverage with use restrictions. The car must be tagged 'Historic' and with limited uses as stated by Maryland. Vehicle can be used for club events, parades, too and from maintenance and occassional use. The car is fully covered. Not just liability. Multiple pictures were taken. I don't believe I'm being hood winked.

[avgwarhawk]

Normally, I hesitate to chime in on the whole insurance debate. Here is my backround. I am and have been a State Farm Agent for over 9 years. Prior to that, I was an Auto Claims Representative for 7 years.

So, I have 16+ years experence in this area.

I can tell you that State Farm's Antique and Classic Auto policy provides AGREED VALUE coverage. If it's insured for $50,000 and a total loss from a covered peril, you would get $50,000 less your deductible. Bottom line.

Make sure your car is in the Antique & Classic Program. If you drive it too often or use it in a way that does not make it eligible for the A&C program, then the policy is in the regular program and is STATED VALUE. Stated value sets the upper limit we would pay in the event of a claim, but it could be less if the market value is lower.

Your agent should be able to tell you if you are in the Antique & Classic program or the regular program. That may be the issue here. Good luck.

Link to forum found here:

http://forums.corvetteforum.com/1550319747-post22.html

I'm getting different answers all over the map though. One guy was complaining Hagerty kept emailing him about not drag racing his car at the local track. He said it was out of hand. I don't know, to each their own.

Edited March 12, 2012 by avgwarhawk (see edit history)

[avgwarhawk]

This is a good article. Bottom line is professional appraisal in hand will do a world of good for getting the declared value.

Classic Car Auto Insurance | Classic Car Auto Insurance

[Restorer32]

I will once again reiterate what I have reiterated more than once before (how's that for grammar?). If you suffer a loss the claims representative who shows up to evaluate the damage likely will have very little if any experience with antique cars. Virtually all insurers outsource their claims work to independent adjusters based on the area where the vehicle lives. I have yet to meet a claims adjuster who knew anything about antique cars beyond the usual Corvettes and '57 Chebbies. It will be up to you to educate them as to the rarity and potential cost of parts.

[avgwarhawk]

I will once again reiterate what I have reiterated more than once before (how's that for grammar?). If you suffer a loss the claims representative who shows up to evaluate the damage likely will have very little if any experience with antique cars. Virtually all insurers outsource their claims work to independent adjusters based on the area where the vehicle lives. I have yet to meet a claims adjuster who knew anything about antique cars beyond the usual Corvettes and '57 Chebbies. It will be up to you to educate them as to the rarity and potential cost of parts.

I would then think best to have an appraisal from a professional that understands the value and what goes into a classic car. I would venture to guess keeping updated date stamped photos would serve us well if the need arised.

[Restorer32]

We've only done maybe a dozen or so insurance jobs over the years but we have found the insurance companies we have dealt with to be generally very cooperative. They aren't happy with paying to repair and replate a bumper (for instance) but once they understand that new bumpers just aren't available for a 1929 Whatsitmobile they come around.

[Restorer32]

I would then think best to have an appraisal from a professional that understands the value and what goes into a classic car. I would venture to guess keeping updated date stamped photos would serve us well if the need arised.

If they argue at all it isn't about the value of the car so much as about the cost of parts and repairs. Speaking from our limited experience of course. They kinda gasp when you tell them it might cost $1000 to have a 1930's bumper straightened and replated properly. They have no frame of reference to go by.

[avgwarhawk]

We've only done maybe a dozen or so insurance jobs over the years but we have found the insurance companies we have dealt with to be generally very cooperative. They aren't happy with paying to repair and replate a bumper (for instance) but once they understand that new bumpers just aren't available for a 1929 Whatsitmobile they come around.

My dealings with State Farm that included windshield replacement and a nice side swipe my wife accomplished was nothing short of stellar. I also put in a claim for flooded basement. They not only cut me a check to cover all ruined pieces of furniture, clean up, carpeting, paint but cut me another check 5 weeks later stating they under paid for the carpet that was ruined. The difference was getting a replacement of same or better quality. This is the reason I went to State Farm from the start. State Farm has been very cooperative with me since 1993.

[avgwarhawk]

If they argue at all it isn't about the value of the car so much as about the cost of parts and repairs. Speaking from our limited experience of course. They kinda gasp when you tell them it might cost $1000 to have a 1930's bumper straightened and replated properly. They have no frame of reference to go by.

Correct, they don't have a reference however this what estimates are for. If the insurance co. has no reference then they will ask you get three estimates. In fact, they might ask you the owner for an itemized list of what you believe the car needs for repairs.

But, I think the thread is really about getting what the owner believes the car is worth. Actual value to declared value, etc.

and...the funny part is $1000.00 is not much compared to some tail light assemblies on cars today. I know of one that was $800.00 to replace. It's all relative in the parts department. I don't think the insurance company gasps at much. My wife bumper replacement after she was rear ended was $800.00. It's plastic!

Edited March 12, 2012 by avgwarhawk (see edit history)

[trimacar]

If you have an accident, the vehicle is repairable, and the insurance company agrees to it, don't have a claims adjuster show up at all, just bring the vehicle to a reputable restoration shop and tell them to send the insurance company the bill.

One of the insurance companies big in antique cars used to work with a local restorations shop in just that manner. Then, you get the car back in the same, or better, condition, than before the accident.

If you take a claims adjuster dollar figure check, figuring you can do it yourself cheaper and make the settlement a profit center, you're kidding yourself...........

[Restorer32]

Estimates? We don't give no stinkin' estimates.

[Bhigdog]

Estimates? We don't give no stinkin' estimates.

HAW HAW HAW.............

[Bushwack]

Fifteen or so years ago I needed short term car insurance for a 1977 1/2 Z28 at stated value (my concerns were theft and fire). Safeco came through but the cost was at a premium. Just putting it out there as another alternative.

[buick man]

This is a good article. Bottom line is professional appraisal in hand will do a world of good for getting the declared value.

Classic Car Auto Insurance | Classic Car Auto Insurance

This article just teaches you how to be just another fish in the pond and how to properly chump onto the bait. It has nothing to do with the finer points explained in this post.

[buick man]

I will once again reiterate what I have reiterated more than once before (how's that for grammar?). If you suffer a loss the claims representative who shows up to evaluate the damage likely will have very little if any experience with antique cars. Virtually all insurers outsource their claims work to independent adjusters based on the area where the vehicle lives. I have yet to meet a claims adjuster who knew anything about antique cars beyond the usual Corvettes and '57 Chebbies. It will be up to you to educate them as to the rarity and potential cost of parts.

Good points 32. ..... and just where you end in your post ( ... "It will be up to you to educate them as to the rarity and potential cost of parts." ) is where my post begins. Cause this is when the dance starts and there are always too few chairs available when the music stops. Why in heck would you want to be explaining parts costs and rarity at the time of loss. Do it at the time of the initial point of valuation before getting insurance.

[buick man]

If you have an accident, the vehicle is repairable, and the insurance company agrees to it, don't have a claims adjuster show up at all, just bring the vehicle to a reputable restoration shop and tell them to send the insurance company the bill.

One of the insurance companies big in antique cars used to work with a local restorations shop in just that manner. Then, you get the car back in the same, or better, condition, than before the accident.

If you take a claims adjuster dollar figure check, figuring you can do it yourself cheaper and make the settlement a profit center, you're kidding yourself...........

Sounds good. Point here is IF the insurance co. agrees to it and you have not pigeon holed yourself into that 70% loss bracket as explained in the article. You can have your shop send all the bills they want but the insurance company is going to cut you off if and when they can based on your market only appraisal leaving you with no retort.

[avgwarhawk]

Good points 32. ..... and just where you end in your post ( ... "It will be up to you to educate them as to the rarity and potential cost of parts." ) is where my post begins. Cause this is when the dance starts and there are always too few chairs available when the music stops. Why in heck would you want to be explaining parts costs and rarity at the time of loss. Do it at the time of the initial point of valuation before getting insurance.

To which I said professional appraisal in hand world do a world of good. The appraisal at initial point of valuation before getting insurance as you stated yet in a few post back the article I posted teaches how to be another fish in the pond. I did not come away from the article with that conclusion. I got from the article what I posted. Get a professional appraisal or in your words, initial point of valuation before getting insurance.

[buick man]

HAW HAW HAW.............

Right on Bhig Dog!

[buick man]

Oh... and I would like to keep the topic of this post on a refined and higher track and that is how to best approach and deal with our initial appraisals by incorporating both the Market & Cost approaches to value and not a discussion on individual companies or that you can get 3 bids or not.

So with that said ... Any shop owners out there?

[Guest krisfelix]

Wow, that is a lot of information. Sorry I skimmed it. Many people age 50 and over forget that they can get an AARP classic car insurance quote. The AARP tries to provide discounts for seniors and why not take advantage? The company they partner with for car insurance is The Hartford so it’s really a win-win situation.

Edited August 28, 2013 by krisfelix (see edit history)

[buick man]

If we can take the time to read the post, then you really should.

This post does not address wether or not you can get a policy whatever it's worth, that is the easy part and a hearty thanks to those concerns that offer us classic car policies. But rather more to the point established here is the question of what are you really getting and when the time comes for you to pass go and collect $ 200 are you actually going to be able to do so as expected and are relying upon?

My position is, no you may not be as "covered" to your satisfaction as you may think. Some companies may or may not arm wrestle you for the little things or hedge the point system a bit here and there, but you can be sure when dealing with an accumulative loss then that is where the policy terms will really come in to play. If you have not established your value base sufficiently and correctly then those seemingly low accumulative damages may tip the scale prematurely and you will be discussing a total scenario on a otherwise completely repairable car with you holding the shorter stick.

[avgwarhawk]

For those that are curious concerning State Farms Classic car insurance, I received a letter from State Farm stating the vehicle is covered under their assessment and what they believe is fair market value, (replacement value at) $19,000.00. It is in writing which is nice but I asked for $21,000.00. The cost is $204.00/year. At any rate, I will let this policy run it's course over the next few months then search for other insurance companies with possibly better coverage or equal too/better than what I requested.

[Tim Wolfe]

Hartford may insure your antique cars, but try insuring the car trailer you haul it in with them!! They wouldn't do it!