Collector Car Insurance

I’m a member of several vintage car forums and one of the topics that comes up time and again is insurance.  It's always a problem for someone!  Hagerty, Taylor, State Farm . . . each company has its promoters and detractors.  When there are complaints, many center on cancellations or rate increases.

I’m not defending or attacking any company, but I’d like to offer these thoughts:

First, we buy insurance from collector car carriers primarily because it’s cheaper, and also because we can then insure our cars for their true value as opposed to some arbitrarily determined book value.  In most states, an antique policy is a lot less money even as it provides potentially superior benefits. Where I am – in Massachusetts – a collector policy for a $75,000 vintage Rolls might cost $500 a year, where regular insurance on the same car could be $2,500.

The rates are lower because the risk of damage is presumed lower than that for a car that’s driven daily.  It should not come as a surprise that the companies monitor claims activity closely, and cancel or raise rates if an insured does not fit the low usage/low risk profile.  That could happen because of multiple small claims, miles driven being higher than expected, or a number of other factors.

You might say that buying collector car insurance at low rates is a privilege, not a right.  We may be excluded from that market by our actions, which may include tickets, poor credit history, excessive losses, convictions for fraud, or other factors.  If we are excluded by one company, we may be accepted by another. If no collector company will take us, we must buy insurance in the regular market, at market rates.

Another way to look at it is this: If we want to get the savings (and often increased potential benefits) of a collector policy, we must strive to fit the model of "low risk insured" that those companies court. With the proliferation of Big Data and the Internet, we have to do an every better job to fit this profile.

We should recognize that all insurers share information on claims made, claims paid, and also our pattern of payment and credit history.  For those who object to credit history being a determinant of insurability I’d refer you to the economists at Fair Isaac who have written some interesting papers describing how complex patterns in demographic and credit data predict insurance losses.  Whether you believe that or not – the insurers believe it, and act accordingly.  So it’s good to be aware.

The next reason we choose collector car insurance is that they generally pay for repairs at restoration shops, not state licensed body shops, often at rates well above those set by state insurance commissioners for regular insurance auto repair.  It’s a surprise to many that the state is involved in labor rate setting, but they are.  Those rates work for a fender bender on a two year old Ford but they won't cover the kind of craft workers you need for the same mishap on a '34 Packard.

From our owner/enthusiast's perspective, those are the things we want to protect our collector cars.  We want a lesser insurance cost, because we don’t drive our vintage cars much.  If we have several, we can only run one at a time.  And we want the ability to have it fixed right, if there is a mishap.

From the insurer’s perspective, there is a lot of risk in these policies for a small amount of premium money.  A typical collector policy might have a $500 per year premium with the potential for $50,000 in vehicle loss potential, and $200-500,000 in liability potential if there is a crash.  So their payout could be huge in relation to the premium.  With that reality you can’t blame them for using the latest data analysis tools to reduce their exposure. 

Another important consideration is that most collector policies are for what is called AGREED VALUE.  That term means just what it says.  If you wreck your car, and the agreed value is $50,000, the insurance will pay you $50,000 or the cost of repairs, whichever is less.  AGREED VALUE pays the contracted sum in the event of a total loss.

Ordinary car insurance assumes you are driving a car that declines in value every year, and they call those policies ACTUAL CASH VALUE.  You may have paid $60,000 for your new Cadillac, and if you wreck it the day you buy it, that's what you'll receive.  But total it when it’s six years old and the ACV may be $11,000. That’s all you will get for it. 

Collector cars do not tend to lose value like that; hence the different type of policy.  Some collector companies offer variations of agreed value; they may increase the coverage 5% per year, or offer other provisions to accommodate changes in markets.  They may also have provisions to exceed an agreed value payment as a result of unforeseen complications once a repair has been started.

That leads me to a final area where I often read horror stories, and it concerns repairs gone wrong.  What happens when you have an accident, the insurer pays the shop to fix the car, and the repair is not acceptable?

Many times I see the owners blame the insurers, while the insurers say its not their responsibility to “do something better” or “do something again.”  They lay the responsibility on the body shop. When repairs are not up to an owner’s expectation it’s sometimes not clear who is responsible.  Did the repair shop do substandard work?  Or did the insurance company’s representative decline to cover certain repairs, or insist on a certain process which did not work out?  There’s no one answer to situations like this; I just suggest you consider all sides of the story.  Remember, as the vehicle owner, it’s your job to choose a repair shop that’s capable of doing what you need.  It’s your insurer’s job to negotiate with them and pay for the work on your behalf, but they do not assure the quality of the finished job.  That is up to you.

I hope this essay has give you some insights into the world of collector car insurance.  I have a related story on insurance here that explains the different kinds of policies.  

One final word . . .  I don't sell insurance, but I do run a company that works on classic vehicles, and we've been paid by all the companies to do jobs over the years.  In my experience, all the specialty insurers have treated us and their insureds well, and paid what we asked in a fair and timely manner.  We've certainly had issues over the years but they all worked out in the end.  I think you can be well served by any of the big names.

John Elder Robison is the general manager of J E Robison Service Company, independent restoration and repair specialists in Springfield, Massachusetts.  John is a longtime technical consultant to the Rolls Royce Owner's Club and other car clubs, and he’s owned and restored many of these fine vehicles.  Find him online at www.robisonservice.com or in the real world at 413-785-1665