Many Mopar owners have enjoyed incredible financial gains due to the phenomenal price increases of their favorite musclecars. That’s great news if you decide to sell, but it could be disastrous news if something happened to that rolling Rembrandt.
It’s a sad and often tragic fact that many very valuable collector cars are uninsured or at best underinsured. We have a friend with a very rare uninsured brand X musclecar that’s worth almost half a million dollars. If such a rare, documented car were stolen it would be very difficult to resell openly, but a fire or natural disaster could reduce the car to a puddle of molten aluminum.
Homeowner’s insurance won’t cover such a loss. Typically, cars have to be insured individually. There may be some coverage for parts waiting to be used on a restoration project, but that won’t cover a whole car even if it is disassembled.
The irony about uninsured or underinsured collectible cars is that many owners don’t get coverage because they think it will be too expensive. The truth is collectible car insurance can be a relative bargain compared to cost of insuring your daily driver.
The great news about insuring a valuable Mopar is that there are specialized insurance firms that are experts at providing excellent coverage at affordable rates. They’re able to provide affordable rates because they understand the limited use most collector cars receive. They also understand how careful collector car owners are. These specialized policies have limitations on usage, but not many people are comfortable driving a restored race Hemi with aluminum body panels to the mall. Even owners of all-steel Mopars won’t risk trips to door ding central (shopping mall or grocery store parking lots).
An underlying principle behind insurance underwriters is risk assessment/management. Insurance companies are in business to prosper, but they also have to be competitive. That means they have to evaluate risks in order to fairly price coverage. They deal in large quantities of policies to spread potential losses over a large number of customers without claims. The insurance industry is all about numbers and statistics.
Muscle Mopars are very valuable, but the incidence of claims is very low. When a payout occurs it can be for huge sums, which is why adequate insurance is so important. The odds of having a claim are very low, which keeps rates affordable. This is a winning situation for Mopar collectors. You can get a lot of security and piece of mind at a minimal expense.
The major auto and household insurance companies deal in such large volumes that they can dismiss specialized collector car policies as not being worth their time. That’s where the more narrowly focused companies come in.
If you deal with an independent insurance agent (one who handles several different insurance companies) he might be able to secure a collector car policy for you. Chances are, though, that he will set you up with one of the specialty insurance carriers that you can deal with directly.
Like any consumer product, it pays to shop around. Check the ads in enthusiast publications and do searches on the Internet. It’s a good idea to quiz other collectible Mopar owners to find out their positive and negative experiences with specialty carriers.
Any insurance company is only as good as its resources and track record. When you’re researching a potential company find out how well the company rates with the A.M. Best Company. This is a company that rates insurance companies based on their financial assets and quality of claims handling. You should stick with companies that are rated “A” or higher.
Collector car policies rely heavily on accurate appraisals. Coverage is often based on these appraisals, but appraisals have to be accurate. Like any insurance policy the companies take a vigorous stand against fraud. Appraisals and photographic documentation are often required before a company will write a policy. They want to know whether they’re insuring a basket case or a concours-perfect car.
There are different types of policies. Three big differences are whether the policy is Agreed Value coverage, Stated Value coverage, or Actual Cash Value coverage. The most favorable choice is Agreed Value coverage. That’s where you and the insurance company agree on a specific value for your car at the time the policy is written. That is the limit they will pay if the car is a total loss. As the value of your car increases you should contact the carrier and make adjustments to the agreed value.
Stated Value sounds about the same as Agreed Value because in theory you have stated a value, but the catch is that the insurance company will pay “up to” the stated value. There is wiggle room on the insurers part in this type of policy.
Actual Cash Value policies represent the most risk for the collector. When faced with a total loss it’s the insurance company that determines the current value of the car. This can involve depreciation (even though realistically the car is appreciating) and the use of value guides that may not accurately reflect the true value of your car.
There are conditions and limitations to collector car insurance policies. That’s part of the reason they’re so reasonably priced. Those limitations can include annual mileage caps, secure covered storage requirements, whether or not the car is modified, and whether or not the car is used for anything besides club events and pleasure driving. Failing to adhere to the limitations can be cause for non-payment of a claim. Be sure you understand the policy conditions and that they’re things you can live with.
The replacement value of your collectible Mopar plays a huge role in determining the cost of the premiums. This cost differential can encourage some collectors to under value their cars. That’s false economy because it only saves money in the short term. If you suffer a total loss and your $200,000 (true value) Hemi Challenger was only insured for an Agreed Value of $100,000, that $100,000 difference is your problem.
Worse that eating the value difference are cases where the policy states that the insurer decides the cars’ fate. They may decide to repair the car or they may total it. Chances are that they legally own the car after they pay off the policy.
In cases of extreme under-valuation some relatively minor damage can exceed the policy cap so the company “totals” the car, gives you the agreed money, and takes possession. They want to recoup their costs so they resell the car for more (even in its damaged state) than you received. Situations like this while extreme are good reasons to be sure everything is accurate, clear and well understood at the time the policy is instated.
At the opposite end of under-valuation is over-valuation. Insurance companies are very wary of people who tend to over insure their cars. That can be a red flag for someone looking to “cash in” on a fraudulent claim. This is another reason accurate appraisals are so important.
Insuring your collectible Mopar is as important as putting gas in the tank. The car won’t run without gas and you shouldn’t run or store it without adequate insurance.