Let me tell you a story. Gary is a classic car collector, he owns several classic cars but he only has classic car insurance on the ones that he drives frequently. One summer day when his daughter was visiting, he decided to take her and his young grandson out to ice cream in his beloved and valuable classic car . It was one that he did not usually drive so he just put his dealer plate on it and they set off. On their way home, Gary was rear ended by a teenage boy who was learning to drive with his dad. Gary filed a claim with his insurance company but he soon learned that he would not receive anything for his claim.
Gary’s dealer plate covered his car using stated value, rather than the agreed value method used for classic car insurance. Under a stated value contract, if there is an accident the insurance company will pay the lesser amount between the depreciated actual cash value and the replacement cost. What does that mean for you? If your car is totaled, you will receive either the stated value of the car that was decided on when you created your policy OR the actual cash value of the car after it has been adjusted for its age. Since classic cars are several years old, you will only receive a fraction of what your car is worth. In addition, the insurance company chooses the sources that it uses to look up the typical value for your car so it has most of the control over your payout. As Gary found out, this puts you in a bad place if you have an accident.
So how do you get around this? Instead of buying a standard auto policy, look into classic car insurance. Our Connecticut insurance agency specializes in protecting classic cars. We use agreed value instead of stated value to determine what your car is worth. When you sign up for your classic car policy, your car will be appraised using photos and a value will be assigned to it based on the type of car and its condition. If an incident occurs that results in the complete loss of the vehicle, the policy will pay the full insured amount of the vehicle and it will not be adjusted for depreciation. This protects you and your vehicle by providing you with the security and peace of mind that you need.
After this incident, Gary fully insured all his vehicles with classic car insurance policies so that his cars would be protected in the future.