Got a classic car, like a 1960s-era Mustang or a gull-wing Mercedes? You could be paying too much to insure it.
Roughly half of classic car owners put their collectible vehicles on a standard auto insurance policy without realizing that they could be paying too much for inadequate coverage, said Ford Heacock III, chief executive of Heacock Classic, a Florida-based insurer of antique and collectible cars.
"A lot of people who are into car collecting as a hobby might not be paying attention to things like insurance," he said. "They just call their agent and add the car to their policy."
Or maybe you inherited Aunt Mabel's Chrysler 300 and are unaware that policies for collector cars even exist.
Insuring a classic with a traditional auto policy is a mistake for various reasons, Heacock said.
For one, traditional insurance is based on the notion that a car's value will decrease over time. But a classic car is likely to appreciate, especially if you're restoring it. You don't want to get a depreciated value if something happens to your pristine 1967 Jaguar XKE, he noted. But if you have a standard policy, that's generally what you'll get.
When buying a classic car insurance policy, which is offered by dozens of specialized insurance companies throughout the country, you and the insurer both agree to the car's replacement value. That price will be based on your assessment of the car's value and the price the car has brought at auction and in collector's sales. If the car is destroyed, you'll get that agreed-to value without having to dicker about depreciation.
It may seem counterintuitive that the premiums would be lower on a policy that provides a higher replacement cost. But the reason is simple: Classic and collectible cars are pampered (and driven infrequently and carefully).
"At the heart of insuring classic cars is the idea that this is your baby and you are not going to do anything to hurt it," said Candysse Miller, executive director of the Insurance Information Network of California and an avowed car buff.
How much cheaper is classic car insurance? The answer varies widely based on the insurer and vehicle.
A State Farm spokesman said it might cost $470 annually to cover a 1968 Camaro with a traditional policy -- with a lot of caveats. (Specifically, the driver had 30 years of experience, multiple discounts and a perfect driving record.)
State Farm would cut that rate by about 20% to $380 annually if you mentioned that it was a collectible car and that you planned to drive it mainly to shows and to show off, said State Farm spokesman Bob Devereux.
Heacock's classic car insurance company would charge even less for similar coverage -- about $290 -- and wouldn't even inquire about the specifics of your driving record.
Why? Because State Farm uses dozens of factors to price your policy, while Heacock has a simpler model. They're mainly looking at the car's value and how it is going to be used. Heacock explains that if you're driving it solely in parades and to and from auto shows, the chance of getting T-boned on the highway -- or slamming into another driver -- is pretty slim.
These low prices come with plenty of restrictions, however. Heacock doesn't cover youthful drivers. (Don't apply if you're younger than 30.) The car can't be driven more than 5,000 miles a year and it had better have a home in the garage, not in the driveway or yard. State Farm specifies that it's insuring you to drive in parades and to car shows -- not to work or to the supermarket.
"We're not looking to insure your second car," Heacock said. "We're only interested in insuring cars that are getting some extra attention."
What isn't necessarily required to secure classic car insurance is an expensive antique vehicle. If a car draws enthusiasts and is driven like a collectible, it probably can be insured like a collectible, said Miller of the Insurance Information Network.
The Chevrolet Impala that you had in college could qualify, as could Grandma's Morris Minor. You could also get classic car insurance on a late-model Ferrari, Lamborghini or Corvette.
But the right insurer and policy are going to vary based on the type of car you have and how (or whether) you drive it. This is a highly specialized niche market, Miller noted. Some companies specialize in antique cars, some in muscle cars or race cars, others in elegant classics.
Moreover, the premium charged for a car that is on display is a fraction of what it is for a car that's on the road, Heacock said. Typically, Heacock figures that a collectible car can be insured for a premium amounting to 1% of its value.
But the most expensive car his company insures is covered for one-tenth of that amount. The reason: It's a $6-million Le Monde-winning race car that's on display and almost never driven. The owners want insurance just in case the garage burns down. They're not concerned about liability for hitting another car on the road.
"These are not off-the-shelf policies," Miller said.
If you're in a car club, ask your fellow Duesenberg or Corvair enthusiasts where they bought their insurance, she said. If you get the right insurer, they're likely to be as enthusiastic about your car as you are. Often, they can even help you find replacement parts if you need help restoring it.
"Sometimes when people find us for the first time, it's like a love fest," Heacock said.
"They're saying, 'You mean I only have to pay $250 for insurance?' And we're saying, 'You mean you've got a '68 Camaro?' "