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What You Should Know
Is It Collector Car Insurance or a Crossword Puzzle?
The answers are not always what your insurance agent tells you ...
It's what agents fail to tell you or don't understand.
by Holly Bromberg
From the book The SL Experience "Five Decades of the Mercedes-Benz SL" The Ultimate SL Resource Book. 358 pages. Over 250 color photos. Hardbound. Full Color. ISBN 0-9635394-2-6
When collectible cars you own are driven only occasionally for pleasure drives, club events, special excursions, maybe 1,000 or certainly under 5,000 miles a year, not used for business, etc., it is time to enroll them in a "collector car" insurance program.
If you are insuring these cars under a standard insurance policy, you should expect problems with claims. Be prepared to deal with a claims adjuster who doesn't understand why using a repair shop of your choice or using original parts is extremely important. Standard auto insurance policies do not guarantee a value for your car at the time of loss. If you wouldn't take your favorite automobile to just any old shop for service, the same is true for its insurance.
There are a few specialty insurance brokers who provide automobile insurance policies designed to cover collectible automobiles for pleasure driving only.
If you qualify, their premiums are usually a fraction of the cost of a standard insurance policy. Insurance company underwriting guidelines may include driving usage, special care for the car (such as how it is garaged), good driving records, and few if any youthful drivers. A few brokers market polices nationwide, often including coverage for spare parts and towing.
First and foremost, your policy should be underwritten by an insurance company admitted to do business by your state insurance department. The insurance company should be "A" rated by Best's Key Rating Guide. The auto policy should be written using policy forms approved by your state insurance department.
The number one source of confusion is physical damage policy coverage. If you obtain a policy using the correct policy form, you'll hit a home run.
Insurance companies will use one of three different policy forms. They are generally known as Actual Cash Value, Stated Value or Stated Amount and Agreed Value or Agreed Amount. Each of these three forms is different, misunderstood, and frequently misrepresented by insurance agents.
Most collectible automobiles have stable values and slowly appreciate over time. Because the values are stable, an "Agreed Value" insurance policy should be obtained to protect your collectible automobiles. Under an Agreed Value policy, if your car is stolen or totaled, you will receive the Agreed Value listed in writing on your auto policy. Ninety-five per cent of all standard insurance companies do not offer an Agreed Value policy.