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When you have a classic car, which is usually defined as one that is at least 40 years old, you want to make sure it is fully protected. Classic car insurance is specially designed to protect the financial investment you’ve made in your collector car.
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While there are agents who can sell you classic car insurance, many people are finding their policies online. But is online classic car insurance trustworthy? Most companies are perfectly legitimate, but it’s important to know what to look for. Read on for tips on getting classic car insurance online.
Why You Need Classic Car Insurance
Classic car owners need to protect their investments. However, the car insurance that most of us buy is intended to provide coverage for cars in everyday use, for commuting and family use. It pays for damages stemming from traffic accidents or other damage.
However, while some people use their classic cars as their everyday cars, many people don’t. For them, the car is a collector’s item, owned for the joy of having it. Many times, classic car owners display their cars in shows.
Thus regular car insurance is not usually adequate coverage for these special cars. Most car owners who don’t drive their vehicles on a regular basis look for a policy that is structured to give the car and owner all the coverage they need and nothing they don’t.
Because classic cars are not driven as much and are as a rule, scrupulously taken care of, classic car insurance is quite inexpensive when compared with standard auto insurance. Many policies can be as low as $300 a year, though this depends on several factors.
The Insurance Information Institute explains how the insurance needs of classic car owners are different.
Applying for Classic Car Insurance
The application process is a bit different for a classic car policy from a standard one. Usually when you are applying for car insurance, all the company asks for is the VIN and for a few options. The VIN gives the company most of the information it needs.
However, most companies that insure classic or collector cars require a bit more. As a minimum, they’ll usually want detailed photographs of the car from several angles, including the interior and the engine.
While not all companies require it photographs, getting an appraisal on the value of the car can be extremely helpful.
While normal insurance uses actual cash value to determine the replacement value of a car, classic cars do not fall so neatly into blue books. They can vary in value widely depending on the age, how well it has been taken care of, the nature of the restorations, and other factors.
Thus, an independent appraiser can help you and the insurance company come to an agreement on the value you are both comfortable. This is important as a good classic car insurance policy uses what is called agreed value. Using this value insures that you’ll be reimbursed for the full value of your car should the unthinkable happen.
Be sure you understand the fine print of any policy before you finalize it. For instance, many policies limit the amount of miles you can put on the car each year. A typical amount is 2,500 miles a year. You can usually purchase a rider that allows for additional mileage, but this will increase the premium.
Also, many policies restrict the way the car can be used. Usually commercial use is prohibited. So if you plan to rent out the car for weddings and such, you’ll need to look at a different policy.
License to Sell Insurance
Each state regulates the insurance industry within its borders. In fact, the company has to be licensed in the state in which it sells. While this doesn’t guarantee that you’ll never have problems with a company that is licensed, it does provide a level of protection.
Not only does this mean that the company has gone through the process to prove to the state that they are a bonafide insurance provider, but it also gives the consumer a way to check on the company.
For example, if you live in Texas and own a classic car, you can go to the Texas Department of Insurance website and search for the name of the company. The site then brings up a lot of information about the company.
You can view the assets of the company as well as information about the officers in the company. Perhaps the most important piece of information you can view is the number of complaints and the complaint ratio/index. This can let you know more about the financial security of the company and whether the company is hard to work with.
If you live in a different state, just check your state’s department of insurance website for similar information in your area.
Any online company has to be licensed in your state in order to sell. If the online classic car insurance company you are looking at isn’t licensed in your state, don’t buy from them.
Your state government is not the only place you can find information about insurance companies. There are independent agencies that provide consumers with information about insurance companies, banks, and other such institutions.
Organizations like Standard & Poors give ratings based on the financial strength of the insurance companies. This rating tells consumers how able the company is to pay what is due to policyholders. They can also give a financial enhancement rating, which rates the company on its willingness to pay in a timely manner.
Another place to look is Weiss Ratings. Weiss rates insurance companies on their financial status and how strong they look for the future. They assign each a letter grade, with A being excellent on down to E, which represents a very weak company.
If you are buying car insurance online for your classic car, it’s a good idea to look up the ratings on these companies. This can help you decide whether you are comfortable entrusting your investment with that company.
Word of mouth is always an important way to find a good service company. If you aren’t sure about a company, see if you can get a recommendation from other classic car owners. Check with your local car club if you are a member to find out if they have had dealings with the company.
Knowing people who have personally dealt with a company successfully can help ease your mind. There’s not a huge number of companies that specialize in classic car insurance, so the same names should come up over and over again.
After checking out their record in your state, viewing their independent ratings, and talking to some clients of the company, you should have a better feel for the trustworthiness of an online classic car insurance company.
Keep Documents in a Safe Place
One last tip regarding classic car insurance is to be sure to document everything and keep the records in a safe place.
When restoring older cars, everyone makes different decisions about what goes into the car. The beauty of this is that no one restored car is the same, even if they were identical when they left the factory.
When insuring a car, make sure you have receipts showing the improvements you’ve made. Depending on the choices you’ve made, this could affect the agreed value of the car.
While most car owners don’t think a lot about the parts on their cars, classic car owners and restorers often put a lot of time and effort selecting the right parts, whether they are original or replicas of original parts or modern interpretations of the parts, you’ll want control over what is put into the car.
This is why it’s important to make sure your classic car insurance policy let’s you decide what type of parts are used, versus the company deciding on the cheapest parts.
You’ll also want to make sure that you have control over where the repairs are done. Not every repair shop is familiar with older cars or restorations. Many classic car owners are very picky about who touches their collector car. If this describes you, then be sure the language of your insurance policy lets you decide who will do any repairs on your car.
It is common for people to be nervous about making significant financial decision online. If your classic car represents a large time or money investment for you, then car insurance is an important piece of protection. By taking the time to do a little research on the company you’re buying insurance from, you can be confident that you are getting a great deal on your classic car insurance.
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