Insuring a classic car: how to protect your prized vehicle
By Mark Hooson
Proud owners of classic cars often lavish their vehicles with care and attention. But do they take as much time and trouble over their motor insurance? A classic car insurance policy is often cheaper than insurance on a modern vehicle, but it pays to make sure that you buy the right cover for your prized possession.
Some enthusiasts only take their cars onto the road during the summer months. Previously they could let their insurance lapse over the winter when the car was off the road. But they could now fall foul of a new insurance law, which makes it an offence: if you car is taxed it must now also be insured.
If you don't drive your classic car at all, you should apply for a Statutory off Road Notification. Insurance and road tax are then no longer mandatory.
Even if you only take your prized possession out on the road during the summer months, you still need to have the correct cover in place. If not, you risk falling foul of new rules, known as continuous insurance enforcement (CIE). Under these rules, it is now a legal requirement to have a classic car covered by a relevant policy at all times. The only scenario in which this is permitted is if the owner has declared it off-road with a SORN (Statutory off road notice). If you apply for a SORN, insurance and road tax are then no longer required.
What's the definition of a classic car?
When it comes to stating what does and doesn't qualify as a classic car, there's no fixed definition which is accepted by all car insurers. For tax purposes, if you drive a car that is more than 20 years old and worth more than £15,000, this is classified as a “classic” by HM Revenue & Customs. However, given the lack of a fixed definition, it's always worth talking to the insurer before signing up to any deal. This will ensure you take out the right level of classic car insurance cover for your particular vehicle.
How much will I pay for classic car insurance?
There are a host of specialist classic car insurance companies which cater specifically for this sector of the market. However, you may also be able to purchase classic car insurance cover from a mainstream insurer. Crucially, as the cost of cover can vary considerably from one insurer to the next, you need to do your research. The best way to compare costs is by using a price comparison service such as MoneySupermarket.
As mentioned above, you don't have to worry about having to fork out a hefty sum for cover, as policies tend to cost less than policies for more modern vehicles. This is because classic cars tend to be better maintained and driven far less than other vehicles - which results in a lower number of claims. And this translates into cheaper premiums.
What is covered by a classic car insurance policy?
While a comprehensive classic car insurance policy is broadly similar to a policy for a modern vehicle, there are a few crucial differences that you need to be aware of.
First off, the valuation of a classic car is very important, as it can be quite tricky working out the “true value” of an older or vintage vehicle. The danger here is that if your policy states that it will pay out the “market value” in the event of a write-off, this payout may not reflect the true worth of the vehicle. To get around this problem, it's advisable to agree a value with the insurer when you apply for the policy.
You can get a valuation carried out by an approved and recognised industry expert before arranging your policy. There may be a cost for this service, but this is a price worth paying to ensure that if the worst happens, you get the right payout.
In addition, you should also talk to your insurer about being able to update the agreed value of the vehicle each year, as some vintage models will increase in value as they get older. Fail to update the policy, and you will not get a payout that reflects the current value.
When setting up a policy, you should also check the replacement parts policy before handing over any cash. This is particularly important if your car is very valuable, as you will want to be sure that any replacement parts are authentic.
While it's possible to get a cheaper policy which does not guarantee to replace parts with authentic pieces, you need to work out whether it's worth paying more to have this additional cover.
With a classic car insurance policy, you also need to find out about the maximum mileage, as insurers set this based on the proviso that classic cars are driven less often than more modern vehicles. Generally speaking, this limit is around 7,500 miles a year, so make sure you check what happens if you go over this limit in any one given year; in some cases this could render the policy invalid. Ask your insurer whether there is any option to change the agreed mileage in the future.
In addition, you need to be aware that with a classic car insurance policy, you do not build up a no-claims discount. As you will pay a flat rate for your cover, it's all the more reason to spend time shopping around for the right policy at renewal time.
Further, given that many classic car owners take their vehicles to events such as shows and rallies, it's worth checking if you are covered - and whether that cover extends to shows and rallies overseas, or if you need to pay an extra premium for this.
Drivers who hire out their classic car for weddings will almost certainly have to extend their cover because most policies do not include cover for use of the car for “hire and reward.”
Classic car insurance for young drivers
While classic cars have long been associated with older motorists, younger drivers may also want to drive one of these vehicles.
As a younger motorist, it can be hard to find affordable cover because insurers will view these drivers as a higher risk than older motorists, and charge them more for cover. The best way to keep a lid on costs is by shopping around for cover to find the most competitive deal that offers the level of cover you require. Once again, the simplest way to do this is by using a price comparison site such as MoneySupermarket.com.
New rules on car insurance
When buying classic car insurance - or any type of motor insurance - you need to be aware of a new ruling on gender which came into effect on 21 December 2012.
The new ruling from the European Court of Justice bans insurers from charging men and women different rates based on their sex. In the past, young women got cheaper motor insurance because they have fewer costly accidents than young men. This has changed now that the directive has come into force, meaning young women drivers could now find themselves having to pay more for cover.
How to get cheap classic car insurance quotes
The good news is, there are several simple steps you can take to keep a lid on the cost of classic car insurance:
- Ask your insurer if they will offer you a lower premium if you agree to a lower mileage limit.
- Consider joining a recognised car club, as this could mean a discount of around 15% on your policy.
- Think about whether you are happy to have just third party fire and theft cover, as this can be cheaper than fully comprehensive cover. But remember that this cover is far more limited, and may not offer the same peace of mind. You should also steer clear of buying insurance on price alone, as you need to check you have the right level of cover for your particular circumstances.
- If you need to take your classic car off the road for a period of time for repair or restoration, you can make savings by taking out what is known as a “laid up” policy. This will cover the car against fire, theft or damage, provided the vehicle is kept in a garage. But as mentioned above, you must declare the car is to be kept off the road to ensure you comply with the new rules on continuous insurance enforcement.
- Finally, as classic cars can be particularly attractive to thieves and vandals, it's vital that you take all the security precautions you can, and that you fit approved devices, and keep your car in a locked garage.
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