How do you define a "classic car"? You may think the new model you're driving now is so great that it's a classic, but that's not what I'm talking about here. I mean the real thing, authentic, everybody knows it when one rolls by, classic automobile. If you are reading this article, you probably have an actual classic or, more likely, are hoping to own one in the future. If so, you are going to have to deal with a few issues unique to classic car ownership, including deciding on the right type of insurance coverage.

 You see, along with the more standard form of auto insurance, the kind we all know about, classic owners have the additional option of insuring their prized ride with classic car insurance.  Classic car insurance works a little differently than regular insurance and, for many, it's a great choice. For others, though, maybe not.  Here's why.

Classic Cars and Classic Car Insurance

Before deciding between regular and classic car coverage, it's important to know just what insurers consider a "classic," and the first thing to keep in mind is that what you may consider as classic, they may  not. And while the range of vehicles that falls under the classic car heading is pretty broad, there are sometimes differences in definitions between insurers. That being said, most insurers consider stock and antique vehicles built in 1979 and earlier as classics. In addition, later models like exotic or high-end sports cars, limited editions and special interest vehicles may qualify, as well as customized and modified vehicles, vintage trucks and motorcycles, and others.

 Terms like "vintage," "antique" and "hot rod" get tossed around along with "classic". Most will be eligible for classic insurance coverage, although the specifics of your policy will differ from vehicle to vehicle.

How Does Regular and Classic Insurance Differ?

There are several specific ways in which regular and classic car coverage are different. Here are the most important:

• Cost:  Believe or not, classic car insurance is usually cheaper than regular coverage. That's because classic owners tend to treat their vehicles with kid gloves and are extra careful when they take them out for a drive. In addition, classic insurance policies typically come with a number of specific restrictions and limits compared with regular policies. For example, most require that a classic be securely garaged when not in use. Also, you can expect specific annual mileage limits to apply, and most policies also come with restrictions on how and where you can use your vehicle.  See below. 

• Valuation:  Insurance companies employ a different method of valuation for vehicles insured with classic policies from those under regular ones. Under a regular policy, vehicles are insured for their "actual cash value." That means that if your car is a total loss, you will be paid its replacement value minus depreciation. Vehicles covered under a classic car policy are commonly insured for an "agree value," that is, an amount agreed upon by the insurer and the vehicle owner up front. In the event of a total loss, the insurer will pay out the agreed value regardless of the current actual cash value and/or depreciation.

• Those Annoying Limits and Restrictions: I touched on this a little earlier. The big trade-off between regular and classic car insurance has to do with price vs. restrictions. You'll likely save money with a classic policy, but you are going to have to adhere to a number of limitations, some you may not want to and some you may not be able to. A few of the most common are:

 

• Secure storage;
• Limited use (usually to parades, car shows, and the occasional pleasure drive);
• Use of a covered trailer when being transported;
• Operation limited to drivers named in the policy;
• Experienced drivers only. Drivers must have five (or sometimes ten) years of driving experience to obtain a classic car policy.

 

So... What's the Answer?

It may have taken a long time to get here, but now answering the question: "Should I buy regular insurance for my classic car?" is simple. Just make a list of the ways you intend to use your classic and see if they fit the limitations imposed by classic car insurance policies. For example, if you intend to drive your classic to and from work, you're out of luck when it comes to classic car insurance. Plan on letting the kids use it? Think regular insurance. Want to race your classic on a track? No classic policy for you. In fact, you won't be covered for that with a regular policy. You're going to need on-track coverage and that's a whole different ballgame.