What you need to know about insurance for your classic car

By: Nelson Smith on July 14, 2016

Many Canadians — especially males born between 1946 and 1964 — dream about buying and restoring one the of many classic cars from their youth.

They imagine cruising down the highway just like decades earlier, girl by their side, wind whipping through their hair. It can cost a lot of money to indulge in that nostalgia, but many baby boomers are now at a place financially where they can afford to relive their youth.

Nobody thinks about mundane things like getting car insurance when they’re restoring a classic car. But it’s important to keep a few important things in mind.

Replacement value

If you’re going to be driving your classic car (if you’re not, then why bother restoring it?), you need to worry about what happens if you get into a collision.

Liability isn’t a big deal. As long as the car is insured, you don’t need to worry about the other driver.

Collision car insurance coverage is more complicated in Canada. Replacement value is a good example. Many of the cars built in the 1950s and 1960s had original price tags of less than $5,000. These days, depending on condition, the same car can go for as high as $50,000.

An easy solution to this problem is to use the price paid for the car. But what if you buy a beat-up classic car and restore it?

An owner and insurance company tend to work together to come up with an agreed upon cash value of the vehicle in case of a write-off. Unlike regular cars, this value doesn’t depreciate each year because classic cars tend to retain their values — or even appreciate over time.

Driving vs. non-driving

It’s silly to treat a half-finished classic hot rod the same as a vehicle that gets serious road time, at least when it comes to insuring it.

If a car is just sitting in your garage or backyard, it only needs a minimal amount of coverage. If it can’t even run, it’s easy to consider not insuring it at all. After all, there’s very little risk of a vehicle like that getting stolen or catching fire.

When choosing insurance for a classic car that regularly leaves the driveway, be prepared to pay more than comparable insurance for a regular car. Many older cars don’t have the safety features that are standard today. This makes classic cars a greater risk to the insurance company.

And like previously mentioned, classic cars can have high replacement values, especially rarities.

Specialize

Most car insurance companies in Canada offer coverage for classic cars. But since they don’t specialize in that part of the business, premiums are often expensive. They tend to treat classic cars mostly the same as regular cars.

Sometimes, it’s possible to get a better deal if you choose a car insurer that specializes in classic cars. These companies are able to give lower rates in exchange for drivers agreeing to only take the car to car shows or drive it occasionally.

These policies can be policed by mileage limits which can be just a few thousand kilometres a year. That’s not much for someone commuting every day, but it can be plenty for someone who only takes the tarp off their classic hot rod a few times per summer.

Many top insurance companies in Canada realize they’re not very good at insuring classic cars and have partnered with specialty insurers to offer more competitive policies. If you plan to take your dream car for a spin, make sure you get the right coverage.

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