In this Opinion piece Bernard Hayden, Head of Risk Management at Azur, looks at avoiding underinsurance in the collectable car market. Classic car values are always changing and a limited edition, race version or prototype, can often be worth a great deal more than a standard example of a particular model.
In an exciting development for classic car enthusiasts, the Porsche Type 64, (pictured above) the first ever built by the company, is to go up for auction this summer. It’s one of the rarest cars in existence, with a reported price of around £16m, and there will no doubt have been a lengthy process to make sure it was insured correctly.
It’s crucial that collector cars like these are insured as quickly as possible – and for the correct amount. After all, classic cars are worth significantly more than ordinary vehicles, as they tend to appreciate in value over time whilst ordinary vehicles depreciate.
Given the dynamic nature of this market it’s important for owners to review their insurance policy every year and ensure their cover is still in line with the current value of their collection to avoid any disappointment if they were to experience a loss.
Getting the right help
One of the most common pitfalls for car collectors is underinsuring. From an insurer’s point of view, rare and classic cars are usually insured on an ‘agreed value basis’. However, given how quickly the prices of these vehicles can change, this sum can often be difficult to calculate. Resources like the K500 (Kidston) Classic Car Index can help determine the value of collections to some extent, but it’s essential to make sure that appraisals by specialists are also conducted regularly and reviewed over time.
Insurance for items like classic cars can seem overwhelming when there’s so much to consider. That is why insuring with a specialist insurer via an insurance broker can be beneficial.
An insurance broker can provide professional advice on the exact type of coverage that is needed for a specific make or model, as well advise on any market changes that could impact the value of a single vehicle or collection.
When it comes to insuring such beautiful cars, one cannot afford to be complacent. Understanding the need for valued and trusted advice is absolutely key when it comes to avoiding underinsurance, especially in such a dynamic market. Whether it’s the first ever Porsche made or an entire collection of classic cars, it is important to seek out expert advice on a regular basis so that owners can have the peace of mind that they are fully covered if the worst happens.