What you need to know about insurance for your classic car

By: Nelson Smith on July 14, 2016

Many Canadians, especially those approaching their golden years, dream about buying and restoring one the of many classic cars from their youth.

It can cost a lot of money to indulge in the nostalgia of cruising down the highway in a classic Firebird or ‘60s-era Chevy, but many baby boomers may find themselves at a place financially where they can afford to live out the dreams of their youth with the dream cars they grew up seeing in movies and magazines.

When restoring a classic car, the last thing that someone thinks about is probably getting car insurance. But a Firebird is not the same thing as a family friendly sedan — nor is it usually driven nearly as much. There are a few important things to keep in mind when insuring your precious classic car.

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. Plus, unlike regular cars, this value doesn’t depreciate each year because classic cars tend to retain their values — or even appreciate over time.

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?

If that’s the case, the 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.

Insurance options for classic cars

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, you may get away with not insuring it at all. After all, there’s very little risk of a vehicle like that getting stolen or catching fire.

However, when choosing insurance for a classic car that you drive regularly, 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.

But between “No insurance” and “Paying a lot for insurance” there’s a happy medium: Classic car insurance. It’s a specific type of insurance offered by some insurance companies specifically catered to older cars of higher value. Generally, to receive classic car insurance, your car must qualify as a classic car — which, depending on your insurance provider, generally means it has a model year earlier than 1980 and has an Agreed Value of Automobile with a specific value, verified by an appraisal report.

For a driver to qualify for this insurance, they must have a clean record and at least 10 years of driving experience, and a separate primary vehicle that they drive regularly. The classic car is only for pleasure or leisure driving (often limited by mileage to just a few thousand kilometres a year) to lower any risk of collisions or claims.

However, the upsides of following these specific terms is that premiums for classic cars are typically lower than regular car insurance, since it’s taken out on the road much less often than a regular car, and the appraisal value will be honoured in the event of a total loss.

How to decide what kind of coverage you need

If you’re in the process of restoring your classic car and it gets no road time, insurance isn’t something you have to worry about.

If you do plan on taking your hot rod out for the occasional pleasure cruise, you may consider looking into classic car insurance. Not only will you pay less in insurance, you’ll get the peace of mind of getting that car’s value back in case an accident occurs.

However, if you want to drive your classic car every day and you don’t want to jump through the hoops of getting qualified for classic car insurance only for your pride and joy to spend most of its life under a tarp, you might consider just getting regular car insurance.

In any case, you should shop around and compare insurance quotes to make sure that you’re getting the coverage you need for the best price available.

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