Ed Fotheringham
Cover Your Assets
October 1, 2005
Another reason that classic insurers can keep premiums low is that they have
a selective process that tends to ensure that applicants are on the up-and-up
when describing how they use their cars. “If the daily automobile is nice, it’s
logical that they won’t want to take the classic to work,” says Bromberg. “But
if the daily driver is a beat-up old car, that raises a flag.” You also have to
have a fairly decent driving record. “It isn’t pricier if you have four tickets
instead of two,” says Hagerty. “We just don’t insure you. You’re either in the
box or out of the box—but it’s a pretty big box.” The insurance world’s
seemingly omnipresent bugbears of fraud and irresponsible policyholders appear
to be far less problematic for these niche companies. But, occasionally, even
seasoned screening can stumble. “We got a claim on a ’63 Corvette late one
night,” says Bromberg. “We called the owner and all he would say is that we
needed to talk to his lawyer. But that’s the exception rather than the rule.”
It’s important to know what kind of policy you’re getting. There are three
basic varieties: an Actual Cash Value policy, typically written for new cars and
relying on the used car market to arrive at a car’s value; a Stated Value
policy, which often factors depreciation into the claims process; and an Agreed
Value policy, in which everyone agrees on a car’s value upfront—and in a total
loss that’s exactly what you get. Guess which one you want. The case for an
Agreed Value policy is straightforward, and it’s the only type some companies
offer. “One of the reasons insurance companies are at ease insuring older cars
on an Agreed Value basis is that their values have already hit rock bottom, and
they might be appreciating,” says Gary Gandy, vice president of Parish
Heacock.
One advantage of choosing regular-use policies is that you rarely have to
wonder if you’re insured for certain activities. As long as a licensed
driver
pilots the car, you are covered for just about any
eventuality.
But the
trade-offs for low premiums on a classic
car policy are
restrictions, and you
might have to break
yourself of the habit of
using the car however and whenever
you like. The most obvious is a
mileage limit—usually 2,000 or
3,000 a year. But
the trend seems to be
moving away from using
this as an arbitrary restriction.
“Mileage isn’t
a very
effective measure,” says Hagerty. “If it’s consistent with
limited use, we trust our customers. It’s very much the honor
system.”
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