Those who own classic cars know that there is just something special about owning an older model of car. One thing that is different about classic cars is that they often go up in value, rather than depreciating in value like most other models of cars. Insuring your classic car properly means that you are protecting your investment in your automobile.
Actual Cash Value Insurance
Most normal car insurance policies pay out the actual cash value of a vehicle if it is stolen or totaled in an accident. For most vehicles, your car is worth less after you’ve driven it awhile than when it was brand new, so your insurance policy pays you less than you actually paid for it. This type of insurance pay-out may be a problem for a classic car, since if you’ve had it for a long time, it’s probably gone up in value. The insurance adjuster, who may not understand much about classic cars, decides how much you get after an accident, and short of legal action, that is what you will end up with, even if you disagree with his assessment.
Agreed Value Insurance
Agreed value policies are a little different. Agreed value insurance means that the day that you sign on the dotted line for insurance, you and the insurance company come to a written agreement about the amount that you should receive if the car is totaled or stolen. That number is what you get, no matter what. It’s that simple, and for classic cars, an agreed value policy is the best chance for you to recover your investment if your car is wrecked.
Stated Value Insurance
Stated value policies are sort of a hybrid of the two. However, there’s a pretty big loophole in the stated value policy that could hurt you as an owner of a classic car. Usually the clause says something along the lines of: “If there’s a complete loss or theft of your car, the insurance company will pay the stated value of the car or the actual cash value, whichever is less.” That small phrase at the end of the clause means that a stated value policy is not much better than an actual cash value policy for the owner of a classic car.
When deciding on which form of auto insurance is best for your classic car, make sure that you understand exactly how your policy will pay out. Don’t assume that you understand the wording of your policy. Ask your agent plenty of questions so that you are completely clear on your insurance coverage.