A well-chosen car insurance policy will insure the covered vehicle for its full value. With standard car insurance policies, determining the appropriate amount of coverage is a fairly simple process. Determining how much coverage a classic car insurance policy should provide, however, is often a more involved matter. If you’re insuring a vintage automobile in Vermont, here are a couple of ways that a policy’s coverage might be determined.
Will a Classic Car Insurance Policy Provide Enough Coverage for My Vintage Automobile in Vermont?
Two Types of Classic Car Insurance Policies
The classic car insurance policies offered in Vermont can be generally grouped into two categories based on how their coverage limits for the insured vehicle are determined. The two main types of policies are stated value classic auto insurance policies and agreed value classic auto insurance policies.
Stated Value Policies Insure for Fair-Market Value
Stated value auto insurance policies normally insure a covered vehicle for its fair-market value, which is generally the theoretical price that the vehicle would sell for. There are several pieces of data that insurance companies might consider when determining this price:
Sales prices of identical or similar vehicles that have sold recently
Winning bids of identical or similar vehicles that have been sold at auction recently
Third-party appraisals that are completed by an approved appraiser
When insuring a newer vehicle, there’s plenty of data available to determine the vehicle’s fair-market value. Lots of newer cars are sold and auctioned off every day, so it’s almost always possible to find several good comps to use in an evaluation.
When insuring a vintage automobile, however, there may be much less information available. Sometimes, finding comparable sales, auctions and appraisals is challenging because there aren’t a lot of similar vehicles on the market. This can make determining a vintage automobile’s ambiguity difficult, ambiguous and somewhat subjective.
Thus, it may be difficult to say exactly how much coverage a stated value classic auto insurance policy will provide for your vintage automobile. It will theoretically cover your vehicle up to its fair-market value, but that number may remain theoretical even after thorough research.
Fair-Market Value May Not Be Enough Coverage
Even when a classic automobile fair-market value can easily and accurately be determined, this still may not be all the coverage you need or want.
First, the fair-market value might be less than what it would cost to replace your vehicle with an identical one. Even though the fair-market value is what your car would probably sell for -- or what it would probably cost to purchase an identical one -- you may have customizations that cost more to install than the market will pay for them. For example, a feature might cost $500 to install but only increase the vehicle’s value by $250.
Second, you might have put more into your vehicle than the fair-market value reflects. If you’ve invested a lot into your automobile, you might want coverage that’s equal to all the money you’ve poured into the car rather than what the car is actually worth.
Agreed Value Policies Insure for a Set Amount
Because of all the challenges noted above, many insurance companies offer classic auto insurance policies that come with agreed value coverage.
Rather than insuring a car for however much the market determines it’s worth, agreed value policies provide coverage for an amount that’s determined when the policy is purchased. Most policies will let you choose the amount of coverage, so you can choose how much coverage your vehicle should have.
Talk with an Insurance Agent in Vermont
For help finding the right classic car insurance policy for your vintage automobile, contact the independent Vermont insurance agents at Paige & Campbell Insurance. Our agents are well-versed in this type of insurance and can help you compare both stated value and agreed value policies. With their help, you can select the best available policy for your particular vintage automobile.