Whether you’ve poured hundreds of hours, as well as a hefty sum of resources, into a rebuild of a model that’s special to you, or purchased a refurbished classic from a dealer expecting to watch it’s value soar as the years slip past, failing to make certain that your investment is protected against unexpected mishaps or disasters just wouldn’t make any sense. Just like any other investment, risk management is critical. With a movable, relatively fragile asset like a collectible automobile, that means comprehensive insurance coverage.
While there are classic car owners who manage to get their valuable collectible added to their conventional auto insurance policies, this is not recommended. An insurance package tailored for classic cars is essential to be certain that your risks are adequately mitigated. This is because, apart from featuring a lower premium than insurance for regular, everyday cars, these customised policies also offer the right kinds of cover and specific policy addenda crafted to ensure that not only is the value of your asset protected, it is covered with a usage model which includes those special occasions when you want to get behind the wheel and show off your rare beast to similarly appreciative enthusiasts.
There are a number of small scale specialists who could customise the right insurance package for your needs, and some larger, more recognised auto insurance brands such as Hollard who already have specific classic car insurance policies available. Alternately, most wealth management specialists will also be able to ensure adequate cover for your investment. Alexander Forbes, for instance, has a Collector’s Cars package featuring all the benefits you may need on your classic car investment journey.
What to look for in an insurance policy
- Is cover based on an agreed value with scope for regular upwards adjustment?
- Is liability included for participation in classic car events and special occasions?
- Are parts which have been temporarily removed, and imported parts included in the cover?
- And perhaps most important of all: will you be given first option to pay for the salvage should your classic car be written off?
John Tyson, Senior Underwriter and Risk Assessor at Alexander Forbes SA, explains; “Because the risk factors of a classic car are entirely different to a conventional car, as well as some uncertainty regarding the value of this market-driven asset, insuring such a vehicle is an entirely different prospect to a conventional family automobile. Factors such as low annual mileage, where and how the vehicle is stored, and a decreased chance of theft due to pure rarity value conspire to drive premiums of these policies down despite the fact that the insured value of the vehicle tends to be high.”
The value of the vehicle itself is ascertained in an entirely different manner to conventional cars. All modern cars have a book value, which is a baseline evaluation of each make and model which the industry calculates based on various standardised factors. This of course is a depreciating value, but in the case of collectible vehicles this value appreciates over time if you have invested in the right machine. Hence classic car insurance policies are based upon an agreed value, which itself is usually based on valuations provided by expert associations in the collectible car trade. These evaluations must be provided by the owner at the time of taking out the policy, and then updated on a regular basis to ensure that further appreciation remains in line with the cover provided.
“Furthermore, risk of damage is not limited to traditional scenarios either. So for instance although the classic vehicle is covered for limited usage to special events and classic car rallies and the like in the case of accidents, it is also covered while being worked on by your chosen specialist. Specifically, parts which are not attached to the vehicle at the time of damage are covered. This is because these vehicles can sit in a workshop awaiting a new part for long periods of time – perhaps the restoration project is not quite complete even as this can be very time consuming. What’s more the parts themselves can often be difficult to come by making them extremely costly to replace or repair. The last thing you want or need is for your classic car investment to be effectively written off because a replacement part sourced internationally has been damaged in transit, leaving you too low on resources to obtain a new part!”
In conjunction with the possibility of some significant gains when you enter the classic car investment arena come substantial risks. Fortunately there are specialists who will assist in mitigating as many of these risks as possible. To own and, even worse, run a classic car with a high and possible appreciating value without an insurance product which recognises your automotive asset for what it is is, quite simply, a risk which just isn’t worth taking.
What you need to apply for Classic Car insurance
- A car 20 years or older.
- Limited annual mileage – the precise amount will depend on your chosen insurer but under 10,000km a year would be expected.
- Certification from a dealer that the vehicle is recognised as a classic.