By: Karen Rimmer, Head of Distribution at PSG Insure
A guide on insurance for classic cars
Owning a classic car is an aspiration for many. Vintage models appeal to the tastes of hobbyists, collectors or those looking to revisit the nostalgia of their youth. For others, buying a classic car is a way of investing in an asset that maintains its value or appreciates with time. This in turn offers them a decent return on investment if they’re able to find a suitable buyer down the line. However, before hitting the road in your 1969 Ford Mustang or Ferrari 250 GT, there are a few important factors to consider. These relate to the upkeep of the vehicle and acquiring the right type of insurance cover to safeguard your wheels against several risks.
The categorisation of classic cars is fairly broad, however, most insurers consider classics to be collectible models that are usually at least 20 years old. The vehicle should also be in a good, original or restored condition and should not be used for every day purposes.
Cover options and special conditions
In terms of insurance cover, classic car owners typically have the same cover options that are available to modern vehicles. This includes comprehensive cover, third-party, fire and theft cover as well as third-party only policies. Owners may also consider taking out laid-up cover, which provides protection exclusively against off-road risks in cases where the vehicle is not being used for a prolonged period of time. This option is popular with classic car owners, who opt to keep the vehicle in storage or in the garage for long periods of time.
Like in the case of conventional models, underwriters will consider factors such as the age of the driver, the address at which the car will be stored and the driver’s claims history, in order to determine an appropriate premium. The age of the vehicle, as well as its classification as a high-powered sports car versus a sedan, for example, are also important aspects that pertain to its risk rating.
There are also special requirements for ensuring ongoing cover on a classic car. These include the limit on mileage per annum, which is normally restricted to 8 000km. The benefits of maintaining classic cover will fall away if the car is used every day, as usage is a major risk factor for these older models, even if they are in good working condition.
Insurers also typically require that these vehicles are stored safely and securely as well as that they are treated as a valuable asset. Furthermore, due to the higher fire risk associated with older vehicles, all classic cars should have a fire extinguisher within reach, preferably under the passenger seat.
A note on value
Classic cars usually retain their value over time, as opposed to conventional vehicles which begin depreciating as soon as they leave the showroom. In previous years, many investors made a profit by restoring and reselling classics, but more recently, vintage enthusiasts prefer unrestored vehicles that have been maintained in their original condition.
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However, owners who do modify or make material changes to their vehicle, should clear this with their insurer, as this may affect its value or give rise to additional safety considerations. In either case, it is important for owners to make every effort to maintain their classic car’s roadworthy condition. For this reason, insurers often require a review of their value once every three years.
Arguably, the most important consideration that relates to the insuring of classic cars is their agreed value. This figure is obtained upon valuation by an independent, third-party expert, which may include a representative from the related car club associated with the brand or model.
Traditionally, classic owners keep a documented trail on their vehicles from date of purchase, including any invoices for maintenance undertaken or replacement parts. This information will be taken into account by the relevant valuator, as well as aspects such as the car’s accident history and whether repairs have been made with the proper level of care by qualified technicians or reputable professionals.
Add-ons to consider
Additional coverage could include cover for rallies and timed events. Owners who aim to participate in classic tours may also wish to take out coverage for the cost of car hire in the event that their classic vehicle breaks down during the event.
If the car is being used for display purposes or as a mode of transport for special events such as matric balls or weddings, special coverage may also be required. Other aspects to consider would be the ‘import of parts’ clause (on internationally sourced or rare models) as well as ‘work away from risk address’ for instances where the owner intends to allow for restoration work to be performed by an outside party.