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Insurance for Special Vehicles

Today, many people own specialized vehicles that call for different insurance requirements. Whether your vehicle is customized with the latest sound system and luxury features, or you drive a restored classic car, your insurance needs differ from the average vehicle owner so it’s important you get the right coverage for your car at competitive rates.

Customized Vehicles

Increasing numbers of people are buying modified cars or having their vehicles personalized to their own tastes and specifications. As such, a standard auto insurance policy for a particular model of car may not reflect the true value of the vehicle or provide the right coverage.

Customizations include custom paint jobs and detailing, the addition of high-end stereos, TVs, DVD players, gaming systems, carpets and other modifications. A standard auto insurance policy will not provide coverage for non-standard items if they are damaged or stolen.

You can normally get coverage added to your policy for these items simply by declaring them to your insurance company and paying a higher premium. The amount of the additional premium will depend on the value of the custom items, and you will need to decide for yourself if the additional coverage is worth the extra premium or if you want to carry the risk instead.

You can lower your premium by storing your custom car in a secure garage, preferably on your own property. A garage without windows will prevent potential burglars from seeing valuable items inside, and an alarm on your garage would provide an additional safeguard.

Be sure to keep your receipts for any specialized equipment you add to your vehicle. Don’t forget to keep receipts for installation costs too. Make a note of the serial number of each item, and take photos of the exterior and interior of your vehicle, showing all custom equipment. These will be essential for a successful insurance claim should your vehicle be damaged or stolen.

Antiques, Collectibles, and Classic Cars

If you own an antique, collectible, or classic car it’s very important that you protect your vehicle with adequate coverage. In particular, you want to ensure that you have coverage for the full collector’s value of the vehicle, not simply the book value. An old classic car may have a low book value, but its restored collectible value may be much greater. The tough part will be proving that to your insurance company if you suffer a loss.

It’s possible to purchase what is known as stated-amount coverage. Stated-amount coverage can be obtained by providing your insurance company with detailed photos of your vehicle together with an independent appraisal of its current market value. Subject to the agreement of your insurer, the vehicle will then be insured for this stated amount and your premium will be priced accordingly, that is, you will pay a higher premium.

In the event your vehicle is stolen or totaled in an accident, you will receive the lower of the stated amount and the current market value. So if the collectors’ market for your car has deteriorated since you obtained your initial appraisal, your settlement will only be for the new (lower) market valuation, not the full stated amount in your policy, even though you have been paying premiums based on the higher stated amount. If the collectors’ market for your car has improved since your initial valuation and your vehicle is now worth more, you will only receive the (lower) stated amount in your policy. Doesn’t seem fair does it?

What should you do? Don’t waste your money on stated-amount coverage. Instead, after getting a range of quotes, buy an ordinary auto insurance policy with actual cash value coverage. Then, be sure to gather and safely store evidence to support the condition and value of your vehicle, including interior and exterior photos and, if possible, an independent appraisal from someone experienced in appraising classic cars.

Then, if your car is stolen or totaled in a wreck, use this evidence to demonstrate the current market value of your vehicle to your insurance company. Use this information to get a new appraisal for the value of your vehicle at the date of loss and present this to your insurance company when you file a claim.

If you only drive your collector’s car occasionally for club events or special excursions, and it is not used for business, you may be able to get a discounted premium. Often this requires you to have another daily use vehicle insured in your name, but it could save you a considerable amount on your insurance.