Understanding Competition and Collector Car Coverage

Tip:  Before purchasing insurance for your new Collector Car, understand “Agreed value VS. Stated Value”

Your insurance agent writes auto coverage every day, but opportunities for collector vehicle coverage are less common, and the kind of coverage needed is different. An essential concept that you, and your agent, need to understand is agreed value.

Agreed Value

Every insurance policy includes a loss settlement provision which defines what amount will be paid by the insurance company in the event of a total loss.

In a standard auto policy, the value of the car follows a “blue book” type formula. In contrast, a specialty collector car policy specifies the pay-out amount. However not all collector car policies are the same.

The preferred method is for the carrier and the policyholder to simply agree upon the value and write that amount into the policy. If there is a total loss or theft, the payout is for that already agreed upon dollar amount. No misunderstanding and no arguments.

Standard carriers treating a collector car as a standard auto, and even some specialty policies, offer “stated value” coverage. It’s not the same. In fact, it’s really just actual cash value coverage with a maximum limit – and the carrier determines the value of the vehicle after the fact. Save yourself a lot of potential disappointment and insist on agreed value coverage.

Understanding Collector Vehicles

Key terms related to classification of vehicles

  1. Classics: are vehicles at least 25 years old, however they are built no earlier than 1950. The value is not decreasing and it will have some “collector appeal”.
  2. Antiques: are older than 1949. Some are in “original” condition, but many you’ll see are restored to the original specs.
  3. Kit Cars: are assembled from a package by a consumer or dealer in a shop, instead of being built in a factory by a standard automotive manufacturer. Generally Kit cars replicate a previously manufactured vehicle.
  4. Exotics: are newer vehicles characterized by high performance, exclusivity (limited production), and considerable repair costs. Examples: Ferrari, Lamborghini, Corvette ZR1, Aston Martin.

Race Vehicle Coverage

“Collision” – only if the Declarations indicate that collision coverage is provided for that auto, provided that the loss occurs while “your covered auto” is:

  1. Being transported by trailer from one location to another.
  2. Being loaded and unloaded from the trailer.
  3. Being driven to and from the trailer to the “paddock” or show display area.
  4. Located in the race facility’s “paddock” area or a specified show display area.
  5. Located at the primary place of garage; or located at a facility for service related functions.