Collectibles: Cheaper Insurance?

Classic car insurance is often cheaper than insurance for newer vehicles, but it depends on several factors. Classic car insurance typically costs $200 to $1000 per year, whereas standard insurance is usually over $1000. The lower cost of classic car insurance is due to the reduced risk of accidents and theft, as these vehicles are not used daily and are often stored securely. Classic car insurance policies also consider the vehicle's agreed-upon value, which doesn't depreciate over time, unlike standard insurance.

Classic car insurance provides specialised coverage options and expert services for classic car owners, which may not be available from regular insurance companies. The eligibility criteria for classic car insurance vary by provider but generally include age, condition, usage, and storage requirements.

Safety features

Classic cars are generally considered less safe than modern vehicles. They often lack modern safety features such as crumple zones, anti-lock braking systems (ABS), airbags, and seatbelts. The absence of these features can increase the risk of sustaining serious or fatal injuries in the event of a crash.

Anti-Lock Braking Systems (ABS)

ABS reduces stopping distances while maintaining steering control. This can be crucial in avoiding accidents or minimising their impact.

Seatbelts and Airbags

The inclusion of three-point seatbelts and airbags can provide additional protection for occupants in the event of a collision. Modern cars often have multiple airbags to cushion occupants, and some even have seatbelt tensioning systems that hold you securely in your seat.

Crumple Zones

Modern cars are designed with crumple zones that absorb and divert crash forces away from occupants. This helps to reduce the impact transferred to the driver and passengers, potentially minimising injuries.

Backup Cameras

Adding a backup camera can improve safety by providing better visibility when reversing, reducing the risk of accidents or backing up into objects or people.

Power Steering

Upgrading to power steering can enhance manoeuvrability and control, making it easier to avoid unexpected obstacles and improving overall safety.

Carbon Monoxide Reduction and Exhaust Diversion

Implementing measures to reduce carbon monoxide levels and divert exhaust fumes away from the cabin can significantly improve air safety. This can be achieved through the use of catalytic converters and strategic engineering of cabin airflow.

While classic cars may have a certain charm and appeal, prioritising safety might lead one to opt for a modern vehicle with more advanced safety features.

Repair costs

Classic car insurance is often cheaper than regular car insurance, but it also comes with certain limitations. One of the main reasons for the reduced cost of insuring a classic car is the expected difference in usage compared to a regular car. Classic cars are generally expected to be driven less frequently, maintained with greater care, and driven with greater caution. This results in a lower likelihood of filing an insurance claim.

Classic car insurance policies also differ from regular car insurance in how they determine the value of the car. Classic car insurance policies use an agreed-upon value of the car, which is determined by the owner of the vehicle and the insurance company based on an appraisal. This agreed-upon value remains constant and does not depreciate over time. In contrast, regular car insurance policies base their value on the actual value of the car, which takes into account depreciation. As a result, the maximum payout on a classic car insurance policy will not decrease over time, whereas the payout on a regular car insurance policy will be lower if the car's value has decreased.

When it comes to repairs, classic car insurance policies often offer specialised services for the expert repair of exotic vehicles. These services are typically not available from regular car insurance companies. Additionally, classic car insurance companies may offer spare parts coverage, which includes damage or theft of spare parts such as tires, valves, or other gear as part of a covered incident.

However, it is important to note that classic car insurance policies may come with certain drawbacks, such as mileage limits and restrictions on who can drive the vehicle. Classic car insurance companies usually require the vehicle to be stored in a secure and enclosed location, such as a private garage or storage unit, and may impose limitations on the time of day the car can be driven.

Theft risk

The risk of theft is a significant factor in determining car insurance premiums. Cars with high theft rates are generally more expensive to insure because they pose a higher risk of being stolen and, consequently, a higher risk of insurance claims being filed.

Additionally, vehicles with advanced safety equipment, such as parking assist and lane departure warnings, tend to have higher repair costs due to the expense of fixing or replacing these features. This, in turn, can increase insurance rates.

When it comes to theft risk, some factors that insurance companies consider include:

• The make and model of the vehicle: Certain cars are targeted by thieves more frequently than others due to their desirability or ease of theft. Luxury and supercars, for instance, tend to be at a higher risk of theft.
• Security features: Vehicles equipped with anti-theft systems and other security features are seen as less likely to be stolen, which can lead to lower insurance premiums.
• Location: The area where the car is typically parked or garaged can impact the risk of theft. Insurers may consider factors such as local crime rates and the security measures in place to protect the vehicle.
• Age and condition of the car: Older vehicles with outdated security measures may be more vulnerable to theft, especially if they lack modern anti-theft technology.
• Previous theft history: If a particular model or make of car has been frequently stolen in the past, insurers may consider it a higher-risk vehicle, which can result in higher insurance rates.

It's important to note that while theft risk is a significant factor, it's not the only consideration when determining insurance rates. Other factors, such as the cost of repairs, safety features, and personal factors like age, gender, and driving history, also play a role in calculating insurance premiums.

To mitigate the risk of theft and potentially lower insurance rates, vehicle owners can invest in additional security measures, such as installing alarms, immobilisers, or tracking devices. Taking proactive steps to reduce the risk of theft can not only provide peace of mind but may also result in cost savings in the long run.

Vehicle type

The type of vehicle you drive is a significant factor in determining car insurance premiums. The make and model of your car are considered when insurance companies assess risk to set their rates. This includes the cost of repairs, safety features, and personal factors of the driver.

SUVs

SUVs tend to be safer in collisions than smaller sedans and are often cheaper to insure. However, this depends on the type and size of the SUV. In some cases, SUV premiums may be higher due to the risk of rollover accidents, theft rates, collision damage, and repair costs.

The Honda HR-V is the cheapest SUV to insure in 2024, with an average annual premium of $1,673. The Mazda CX-30 is a close second, with an average annual premium of $1,678.

Sedans

Sedans are often fuel-efficient and have better gas mileage than SUVs, trucks, and vans. They are usually made with lightweight materials and smaller vehicle designs, and their parts tend to be more affordable. However, sedans are more likely to be damaged in a collision with a larger vehicle, which can make them more expensive to insure than SUVs.

The Subaru Legacy is the cheapest sedan to insure in 2024, with an average annual premium of $1,886. The Honda Accord is the second cheapest, with an average annual premium of $1,971.

Trucks

The cheapest truck to insure in 2024 is the Ford Maverick, with an average annual premium of $1,746. The second most affordable truck to insure is the Ford Ranger, with an average annual premium of $1,864.

Classic Cars

Classic car insurance provides special coverage options and expert service for classic car owners. The most important feature is agreed-upon value coverage, where the insurance company agrees on the value of your car based on an appraisal. Many companies also offer special coverages for things like displaying your vehicle at car shows.

Classic car insurance policies may come with drawbacks like mileage limits, and only certain cars are eligible. To be eligible for classic car insurance, your car must be at least 25 years old and parked in a secure and fully enclosed garage, carport, storage facility, or other approved structure. It should not be used for daily commuting and should be driven no more than 7,500 miles per year.

Classic car insurance is generally much cheaper than conventional insurance for a regular car because classic cars are not driven every day.

Personal factors

Classic car insurance is generally cheaper than insurance for newer vehicles, as classic cars tend to be well-maintained, stored securely, and driven infrequently. However, personal factors also play a significant role in determining insurance rates. Here are some key personal factors that can influence the cost of your classic car insurance:

• Age and Gender: Age is a critical factor in determining insurance rates, with younger drivers, especially teenagers, paying higher premiums. Insurers believe that younger drivers are more reckless and prone to accidents. Additionally, gender influences insurance rates, with young male drivers often paying more than young females due to a perceived higher risk of vehicle damage and accidents.
• Driving History: A clean driving record with no violations or accidents can lead to lower insurance rates. Conversely, accidents, speeding tickets, and DUI convictions will typically increase your premium.
• Marital Status: Married drivers often pay lower insurance rates than single, divorced, or widowed individuals. This is because married individuals are considered more financially stable and likely to drive more safely.
• Credit History: In most states, insurance companies consider your credit history or credit-based insurance score when determining rates. Lower credit scores may result in higher premiums as insurers associate them with a higher risk of filing claims.
• Location: Your location, including your city and ZIP code, can impact insurance rates. Areas with higher populations, accident rates, theft, and severe weather conditions tend to have higher insurance premiums.
• Mileage: The number of miles you drive annually affects your insurance costs. Cars with higher annual mileage are generally charged higher insurance rates as they are considered to have a higher risk of accidents.
• Education and Occupation: In some cases, your level of education and occupation can influence your insurance rates. Higher education levels may lead to lower premiums, while certain high-risk occupations, such as Uber drivers or DJs, could result in higher rates.

Frequently asked questions