Classic car insurance does more than a standard auto insurance policy and often for a lower price. It mostly comes down to depreciation versus increase in value.
While the owner of a regular, everyday car that’s more than 15 years old will likely get a small payout if the car is in an accident and declared a total loss due to depreciation, the owner of a classic vehicle that’s the same age is more likely to get an insurance payout that covers the car’s full value because antique cars usually rise in value as they get older.
Collector car insurance can be half as expensive as an insurance policy for regular-use vehicles.
In this story, we’ll go over how to buy classic car insurance, why it’s cheaper than regular car insurance, extra benefits of insuring an antique car, how the value of your car is set, how to avoid higher premiums, and some short reviews of a few insurance providers for a collector vehicle.
What is classic car insurance?
A classic car must be more than 15 years old, in mint condition, driven less than 5,000 miles annually, and used as a second car to be considered a class car. Does that describe the 2005 Toyota Camry you’ve been driving to work for so a decade and a half? Probably not.
Having a 15-year-old car doesn’t necessarily make it a classic car that qualifies for cheaper insurance premiums, though a car’s age is a factor in defining a classic car.
Other criteria may also be required, which we’ll go into detail soon. But if you own a classic car, you probably already know it.
Why classic car insurance is cheaper
Insurance carriers drop the price for classic car coverage for many reasons. A car kept in a locked garage is better protected from the weather and thieves and is less likely to be in accidents if not driven on a daily commute.
A car in mint condition that is rarely driven is also less likely to require an insurance claim because the owner is more likely to want to keep it in mint condition by not going it much.
Classic car insurance can be half the price of regular auto insurance. However, owning a rare or expensive classic model car in high demand can lead to slightly higher rates. It can pay to get multiple quotes from many car insurers and make sure you get the amount of coverage you need.
How ‘agreed value’ factors in
When an everyday car is stolen or is determined to be a total loss from a crash, the insured will usually get a payout for its actual cash value. That’s the car’s pre-collision value that your car insurance company determines, minus the deductible you pay for comprehensive or collision coverage.
The actual cash value will take into account the car’s age and depreciation. The older a vehicle is, the more value it loses each year from the purchase price.
However, a classic car usually gains value each year, especially if it’s in high demand or has been modified. Before a policy is signed and takes effect, insurers typically ask customers to settle on an “agreed value.” Car owners agree to a set payout for a claim.
The agreed value isn’t based on what you or the insurance company say it should be but is set by an official estimate of its worth.
This can be done through a classic car club, which usually has people who value cars by knowing your car type and model. They’ll give you a document showing the value of the vehicle.
The insurer may also want an evaluation certificate from an independent vehicle valuation expert. You may have to pay around $200 to get this done every time you want to change the valuation of your car.
An insurance company may also want photos of the vehicle. If a lot of restorative work has been done, it may ask for bills showing payment.
What classic car insurance covers
A classic car insurance policy, also known as collector car insurance, covers antique cars and other types of cars that you’d expect to be called classics. In general, antique cars are 45 years or older, and classic cars are 20 years or older.
An older car has significant historical interest to be collectible and worth preserving or storing instead of sending it to the scrap yard. An easy place to find them is at a car show.
A classic vehicle isn’t just one type of car. It can include hot rods, muscle cars, motorcycles, replicas, military vehicles, limited production cars, and a collector vehicle that’s only driven for occasional pleasure. Replicas can also be insured, such as a 1966 Batmobile.
A classic car insurance policy covers the same risks a daily driver would need for any regular-use vehicle in a standard auto policy. This includes collision, liability, comprehensive, and uninsured or underinsured motorists coverage. Mandatory liability coverage that’s required in your state applies to a classic car.
Extra insurance can also be bought for a classic car through add-ons, so the car is covered when:
- Being restored, which can take months or years.
- Displaying the car at a car show in case someone or something hits it while on display.
- Racing at a track day where time trials let drivers put a classic car through its paces.
- Going overseas with the car for up to 90 days a year.
- Auto parts are stolen or damaged and it is hard to find some replacement parts for rare cars. Spare parts coverage can help.
- Inflation rises, and your car appreciates 4-6% in value, causing the need for inflation protection so that your protection limits don’t rise.
Modifications can raise prices
Some classic car owners modify their cars to make them roadworthy. Others may be cosmetic. Modifications can cause insurance premiums to go up for a standard car to increase a vehicle’s value. Modifications can also raise the value of a classic car, but the insurance premiums usually won’t go up as much as they would for a standard car.
This is because the underwriting experts realize that changes to a classic car aren’t being done to make the car go faster but to preserve it.
Modifications that classic cars may undergo can include:
- Adding GPS and other computerized accessories to the dashboard
- New engine
- Improved fuel performance
- Electronic ignition
- Power steering
Save by joining a car club
Bundling your auto insurance with a homeowners policy or having multiple cars on a policy may be difficult when a classic car is added. It’s an apples-and-oranges comparison on coverage needs.
Not many large insurance companies insure classic cars. Geico does, which we’ll review later, but for the most part, you’ll have to look for an insurance company that specializes in classic cars. Some may offer bundling discounts, such as Geico.
Since many classic car insurers require drivers to be older than 25, drive few miles in a year, use it as a second car, and store it in a garage, discounts for those things are usually already factored into a lower insurance rate.
Getting more of a discount can help to have a clean driving record, but probably not as much as you might think. The car is already a second vehicle that you’re not driving often, so not having insurance claims probably won’t get you much of a discount.
A big way to save is to join a car club. For $25 to $50 or so per year, you can join a car club of other enthusiasts and save up to 25% off car insurance.
Insurers see car club membership as proof that you’re committed to being a good driver and lower premiums as a reward.
Members can also save money by getting discounts from suppliers for spare parts and on-car services.
Meeting an annual mileage limit may also lead to a discount, though it may already be factored in as a condition of getting a classic car insurance policy. A mileage limit is typically 5,000 miles, though some insurers may go as low as 2,500 miles, and others may allow unlimited mileage.
Costs of insuring a classic car
Classic car insurance costs $200 to $600 per year, and can go to $1,000 or higher for a car with a very high value.
Classic car owners with a good driving history and years behind the wheel can get policy discounts.
If you’re doing a lot of work rebuilding and making improvements to your classic car, then it’s a good idea to negotiate a new agreed value. The car’s value can rise as you make improvements, so talking to your insurance company about a new agreed value can ensure you get the correct value of the car if a claim is filed.
Rebuilding a classic car is often part of the adventure for owners. This can include replacing old, broken parts with original ones, reupholstering the seats, rebuilding the engine, or adding original hubcaps.
Before a classic car is restored to running condition, you can choose to have part of the car insured at a cheaper rate than a fully functional car. The vehicle may not even have an engine or wheels. You can still reach an agreed value for just the frame, for example, if it’s worth insuring.
Class car insurance providers
It’s almost always worthwhile to shop for car insurance every year. You can get multiple quotes online in a few minutes for most types of coverage.
However, classic car insurance can require a little extra work because not all insurers offer it and because online quotes may not gather enough information to give an accurate quote for vintage cars.
You may have to look for a classic car specialist to help you or get the ball rolling yourself by contacting companies that offer such insurance. Here are three:
Geico is one of the largest auto insurance companies around, and it offers classic car insurance. It provides many of the same coverages as a standard auto insurance policy, with collision and comprehensive coverages based on the vehicle's agreed value. It also offers up to $500 coverage for spare parts.
Geico requires collector vehicles to be at least 25 years old; stored in a fully enclosed and locked structure; and used only for exhibitions, club activities, and occasional pleasure trips, not as primary transportation.
No vehicle appraisal is needed to get a Geico policy. The vehicle is covered at the agreed value, meaning no depreciation if there’s a claim.
Hagerty Drivers Club
If you’re restoring a car, an insurance policy through the Hagerty Drivers Club may be a good fit. Hagerty offers coverage for restoration cars at any stage of your project, has spare parts coverage of $750, and has no fixed mileage limits.
The Hagerty Drivers Club offers 24/7 roadside assistance, free towing of up to 20 miles, and discounts on car accessories, car rentals, and transportation services. Membership costs $45 annually. It also offers help finding car parts.
You don’t have to be a member of the driving club to buy classic car insurance from Hagerty. The company says its premiums are 34% lower on average than daily driver insurance.
Hagerty underwrites Progressive classic car insurance so that you could bundle your other cars for a discount through Progressive.
Grundy Insurance covers more than just classic cars. It also offers insurance for homeowners, auto collectors, special collections such as antique guns, umbrella insurance, classic boats, car museums, and classic car dealers and restoration shops.
Grundy has insured classic cars since 1947 and was designed for collector vehicles. According to the company, it can save customers at least 50% of the cost of regular car insurance. Its coverage is never reduced as long as you maintain your policy.
Grundy insures most types of vehicles 25 years old and older. It also insures modern muscle cars and exotic cars of all years, including hot rods and other vehicles with performance engines.
It allows unlimited miles for pleasure driving and car collector activities, along with occasionally driving it to work to show off to friends. However, it can’t be used as a daily car to drive.
Pros & cons of insuring a classic car
- Classic car insurance can be around half the price of insuring a regular car.
- Joining a car club can have more benefits than buying insurance, such as free towing and discounts on car accessories.
- Classic cars usually appreciate.
- Restrictions on insuring a classic car can include mileage, using it as a second car, and storing it in a secured building.
- Check insurance rates each year if you’ve improved your car and its value has increased so that you get an agreed value that’s equal to the higher value.
- Getting online insurance quotes may not be easy because insurers need specific information that online forms are unlikely to ask for.
The bottom line
Classic car insurance is a worthwhile expense for many reasons. For about half the cost of regular car insurance, it insures a valuable asset that can gain value over time. That’s a rare attribute for a car and one that’s worth insuring after investing so much time and money in a classic car.
You may have to drive fewer miles and have a second car for your daily driving needs, among other restrictions, but you may sleep better at night knowing that your costly hobby is fully insured as it sits parked in your locked garage.