JANUARY 2006

ARTICLE IN ST JAMES’S PLACE INVESTOR MAGAZINE - RACING COVERAGE

Though they are priceless to their owners, classic cars may be cheaper to insure than you think, says Jeremy Cary.Special cars require special treatment.

Whether it’s a 1904 Darracq or a 1954 Mercedes-Benz W196 racer (the world’s most expensive classic car), it needs special insurance to protect its investment value.‘This is certainly not the domain of a high street insurer’, insists Jeremy Cary, Managing Director of specialist broker Stackhouse Poland. ‘You need someone who can provide breadth of cover, who uses specialist policy wordings but still charges a competitive price’.
There are many specialists providing cover for collectors’ cars, including Adrian Flux and the RAC. And enthusiasts, whether they drive a Lotus or a humble Morris Minor, can often get preferential terms through owners’ clubs.Before you sign up for cover you will need to get a valuation for your car, which can be ‘agreed’ with the insurer. A valuation of a vintage Rolls Royce can be obtained in much the same way as a valuation of an Old Master painting – by asking a specialist valuer to assess the quality of the vehicle, and to compare it with similar items on the market.
Looking at prices fetched by specialist dealers, such as Coys, will help. For more unusual cars you might go to one of the big auction houses, such as Bonhams.If your chosen mode of transport is something more modest, such as a Ford Anglia 105E saloon the valuation will also depend on the car’s history and provenance. Expect a higher value if you come by one of the vehicles used in the television series Heartbeat, or the Harry Potter films, but rather less if it was simply left to you by your great aunt. In all cases, make sure the ‘agreed valuation’ is ‘guaranteed’ by the insurer, and that the full amount will be paid out should the car be written off or stolen.
The next thing to consider is the type of cover you need. If you keep the car on display, or just take it to rallies and parades, you will not pay as much as if you use the car every day.There are three levels of cover. The first is ‘laid up’ – this would cover cars in a museum, and is basically simple cover for fire and theft. The second level is ‘limited’, which would cover you for the London to Brighton run, with an agreed cap on the annual mileage of perhaps less than 1,000 miles. The third level of cove is ‘full road risk’, which means what it says.
The cost of cover can be remarkably low, even for full road risk. Insurers reckon classic cars are owned enthusiasts, who take pride in their charges and don’t want to damage them. They drive carefully, are conscientious about security and keep their vehicles stored off the street.Jeremy Cary gives the example of one financier who kept three Ferraris of ‘considerable value’ in oxygen tents to protect them from atmospheric damage. ‘The annual insurance premium for all three cars was just £800, because the principal risk was just fire and theft,’ he says.
A classic car could be cheaper to insure than even a modern runabout. A classic costing £10,000 to purchase could cost just £100 to insure, and even as little as £300 - £400 with full road risk.