Understanding the Ins and Outs of Exotic Car Insurance

Classic cars, unlike more modern automobiles, may qualify for less expensive insurance than traditional insurance products simply because the vehicles are driven less frequently. This limits the owner's liability exposure, and most classic car owners generally treat these cars especially well.

Suggestions for acquiring classic car insurance

Most policies have a required driving experience clause.

Some exotic car insurance policies may only cover classic cars if the principle driver has five or more years of experience on the road. Some may also specifically prohibit allowing anyone with less than the required experience from operating the vehicle.

Ask how damaged parts will be replaced.

For owners of an older exotic or rare vehicle, it's likely that tracking down parts may be difficult. Often procuring or reproducing an older part can add significant costs or time delays to the vehicle's repair. Some insurance companies offer parts location services, so it may be better to know ahead of time how the insurance company will pay for, or assist in this process.

Understand exactly how the car is valued.

Many insurance policies cover a vehicle's actual cash value, which means the value is depreciated and the owner pays a deductible. Other policies will pay the stated value, which may be less than the real value of the car, which means receiving less money than anticipated in the case of damage or loss.

An agreed-upon value means the policyholder and the insurer have reached an understanding of the real value of the car and what the insurer will pay. If unsure, it's always a good idea to have it appraised prior to shopping for insurance.

Find out if the policy covers appreciation.

Classic vehicles may gain value each year, unlike most modern vehicles, which depreciate year after year. Look for an appreciation clause, review the contract annually and have the vehicle appraised every 2-3 years to make sure the insurance policy covers the vehicle's current value.

Will the insurance company cover vehicles in the process of restoration?

Many classic or collectible cars may not be in showroom-ready condition, but the owner will still need to protect their investment. Some policies will cover vehicles in the process of restoration.

Understand the responsibilities of the owner.

Read the fine print in the policy's terms to make sure all the conditions are being met. Some products may limit the number of miles the vehicle may be driven annually, cover driving only during certain times of year (seasonal policies), or cover only vehicles protected from weather or vandalism in a garage.