After driving all the way to the L.A. Roadsters' event from Missouri, John Swander had a unfortunate mishap just three miles from the fairgrounds. The upside was that John was not injured and was already gathering pieces to repair his roadster at the swap meet.
In a perfect world, nobody would get into an accident, cars would never get damaged or stolen, and you would never have to spend hundreds of dollars for a service you hope you'll never use. In our imperfect world, having car insurance is a necessity.
It used to be that calling a car insurance company and asking them to cover a hot rod or custom car that you actually planned on driving was a quick way to get a dial tone. As the popularity of specialty cars has grown, specialty car insurance companies have appeared to meet the needs of the enthusiasts who drive them. Today, a quick Google search on the Internet will reveal hundreds of companies providing collision, comprehensive (which covers "other-than-collision" damage or loss), and liability coverage to hot rodders.
Why Insure with a Specialty Company?There are three big differences between most of the well-known specialty car insurance companies and standard car insurance companies. The first difference is that the specialty companies have a better understanding of the value of hot rods. Secondly, their rates are lower. Thirdly, they usually offer agreed value coverage-rather than stated value-or actual cash value.
Stated value was the typical form of specialty insurance until a few years ago, and the term is sometimes used interchangeably with agreed value. It's not the same. With a stated value policy, the value of your car is determined ahead of time, but is subject to depreciation. If your car gets totaled or stolen, the insurance company will pay the lesser of: the value stated in the policy, the cost to repair the car, or the market value of the car. Market value is frequently determined by prices in the classified ad publications, meaning you could end up getting a lot less money than your car is really worth.
Actual cash value is probably the type of insurance policy you have on your regular cars. The car's value depreciates over time and, in the event of an accident or theft, the insurance company pays you what they determine to be the value of the car at that time.
With an agreed value policy, the value of your hot rod is determined ahead of time, and if there is a total loss, that agreed-upon dollar amount is what you will be paid by the insurance company, minus any deductible. There is no depreciation and no hassle.
The key word in this type of policy is "agreed." The value of your car is the amount arrived at by the owner and the insurance company. The company will expect good photographs and a good description to reach an agreement. A realistic and fair agreed value is generally close to what you could realistically expect somebody to pay for your finished car, regardless of how much you paid Chip Foose to build the thing or how much you saw somebody else's car sell for at a Barrett-Jackson auction.
Thou Shalt NotsThe reason specialty companies can offer insurance for high-dollar cars at low rates is that, unlike standard cars that depreciate every year, hot rods generally hold their value, or even increase. Another reason is that the policies have a number of restrictive conditions, which are fairly standard from company to company.