Car Insurance Coverage – Why It Makes Sense to Have the Right One
Classic car insurance differs from standard car insurance in several ways. It is less expensive than standard insurance, has specific feature requirements and may not be the best option for classic cars that are still in daily use. The value of the car, age of the owner, miles driven, housing and age of the car are all criteria that need to be met. Collector vehicles get such low rates of insurance because they are rarely driven, are exceptionally well maintained and usually increase in value over time. If you think classic car insurance is right for your car and lifestyle, you need to know the details of this type of insurance.
If you have a classic car, one that was manufactured between 1973 and 15 years ago, you may be eligible for classic car insurance. This is a much better option than putting your classic car on your regular auto insurance policy. You can protect the investment of a classic and have lower premiums.
The criteria that must be met may vary from company to company, but they will all want to know the age of the driver, the mileage on the car, how the car is housed when it is not in use and the age of the vehicle. There are specialized classic car insurance companies that will cover drivers 21 years or older, but most companies require the driver to be over 25 years. If you car is well protected from thieves or weather, it has a better chance of getting loweMost people look at car insurance as a burden, one that they have to bear because of State insurance laws. They buy the bare minimum state mandated liability coverage to stay legal and carry on driving, assuming they are completely covered in case of a mishap. Yet others start with buying multiple car insurance coverages, and over time decide they need to save money, which can be done by cutting on certain coverages. The rude awakening comes when they get into an accident where they are at fault, or have their car stolen or damaged, and realize their policy did not include the necessary car insurance coverage to cover any of these events. A little bit of planning and foresight can help avoid such situations.
Car insurance isn’t rocket science, and all it takes is some understanding of the basic function of each car insurance coverage and then deciding if it’s really worth investing in or not. This is especially true if you have an old beat up car. Would you rather pay for comprehensive and collision insurance and the deductibles as well (at the time of claiming), or does it make more sense to simply go without, and save the premium and deductible money in an emergency fund for your car? Insurance is a gamble and you pay for the peace of mind from knowing that in case of an eventuality you are covered. You may or may not need to use it.
Liability or third party insurance is another area where you need to consider the particulars of your location, the driving skills of the other drivers using the car, and your financial capability to pay the other driver for any damages you might have caused, in case you are found at fault in an accident. If you drive long hours, on congested roads, or if you have a relatively inexperienced driver also driving this car, you might consider keeping a high liability car insurance coverage. TX car insurance laws for example, ask for a minimum liability of 30/60/25 starting January 2011. One in five people in TX are uninsured, so while you want to be sure you get adequately compensated in case of an accident, you might also want to buy Uninsured Motorist/Underinsured Motorist coverage if you live there.
Umbrella insurance is one of the most under rated car insurance coverages. It’s actually a very smart way to increase your liability coverage and comes in handy incase of potentially bankrupting lawsuits. You don’t want to have to pay out of your pocket in case your car hits a school bus full of kids and hurts somebody seriously or ends up totaling a high-end luxury car. It doesn’t cost too much to get $2 million umbrella insurance, and it kicks in only when the upper limits of your liability coverage have been exhausted.
Gap insurance is a good option to invest in if your car is not fully paid for and you still have to make most of the payments. In case your car is totaled, your full car insurance coverage will only pay for the car’s blue book value which factors in its depreciation amount, whereas you will still need to pay your dealer the balance installments for the car, making you upside down on your payments. Gap insurance fills this gap and helps you pay off the balance amount. However, investing in gap insurance is only recommended if you still owe most of the money on your car.
PIP or no fault coverage is mandatory in some states while it isn’t available in others. However if it is available in yours, it’s a good option to look into, after reviewing your health insurance policy. Personal Injury protection coverage takes care of medical, work loss, funeral, survivor’s loss and other maintenance expenses incurred post an accident regardless of who is found at fault in the accident; a good car insurance coverage to consider as it takes so many factors into consideration while calculating your claim account.
So next time you decide to buy yourself just a minimum liability car insurance, think twice. The liability coverage will only compensate others for injury or property damage caused by your car; it will do nothing for you. Also look at the other car insurance coverages and try to strike a good balance of rates and coverage to give you better protection in case of an unforeseen eventuality.
Bethany Collins is a Work at Home Mother (WAHM) who lives with her husband and two kids. She loves to read and surf the internet looking for new money saving tips, recipes, etc. In her spare time she writes on personal finance [home, life and car insurance, budgeting, and other investment options] and grows organic vegetables in her small vegetable garden.
Another difference between standard auto insurance coverage and classic car coverage is the value of the car along with depreciation. Standard car insurance covers the current value of the car, minus depreciation. The older the car gets, the less it is worth. A classic or vintage car does not depreciate in value over time. If the car is well maintained and rarely driven, the value will increase with time.
This different situation is why there are specialty insurers. Usually, the insurer and the owner will agree on the value of the car. This is called Agreed Value Coverage and may be based on an independent assessment of the value of the classic car. The insurance coverage will include the agreed value of the car which will be stated on the policy, and will add the appreciation value at the time of loss.
Finally, some car specialty insurers will exclude deductibles or have very low deductibles for collision and comprehensive coverage. They may even cover spare parts and accessories that your classic car does not have at the time. This is very specific to classic or vintage cars because they are more like art objects than running vehicles and are used very little. Standard auto insurance will not give this kind of special coverage.
For car models over 15 years old that are not driven much and are owned by an older person, insurance is a much cheaper option for car insurance.