Do I need car insurance on a car I am restoring?
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UPDATED: Mar 13, 2020
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Any vehicle you own that could cause damage to another person’s property needs to carry liability insurance. Even if you don’t drive the vehicle regularly, you should carry insurance on that car. In the case of classic cars or those undergoing restoration, carrying certain auto insurance coverage is a wise idea. It may not be necessary to carry the coverage unless you drive the car, but a car insurance policy will help protect you and your vehicle against certain risks.
Why does a car need insurance if I don’t drive it?
Classic car restoration is a popular hobby for many people. Many times, old vehicles are purchased in varying states of ill-repair; these autos may require substantial work before they are safe to drive. Nevertheless, a vehicle can still cause damage without being driven:
- The vehicle may slip out of gear and roll from the driveway, colliding with a neighbor’s car or mailbox.
- The vehicle could fall on you or a friend while you’re working on it, causing injuries.
- Electrical problems could cause the vehicle to catch fire; the fire could then spread to neighboring structures
- If you test-drive the vehicle to see if it’s running, you could collide with someone else
For all of these situations, liability insurance would pay for the damage or injuries caused by the vehicle. If you did not carry insurance on that vehicle, you would be responsible for paying the damage out of your pocket. While the risk of causing damage with a vehicle in storage or undergoing restoration is fairly low, it may be worthwhile to purchase at least minimal amounts of coverage to protect against these occasions.
You may also be interested in buying coverage to protect damage caused to the vehicle while you are repairing it. Even if a vehicle is in storage, it can obtain damage in multiple different ways:
- The garage it’s stored in could be destroyed by a natural disaster
- The vehicle could be caught in a flood and damaged by water
- Someone could collide with it while it was parked in the driveway
- Something could fall from a shelf in the garage and damage the vehicle
- Mice or squirrels could get inside and chew the wiring or the upholstery
At a bare minimum, you should consider carrying comprehensive coverage on your vehicle if it is in storage. Comprehensive coverage pays for most non-accident damages, such as those caused by nature or animals, and is usually fairly inexpensive compared to other insurance coverage.
Stated Value Policies
If your vehicle is a restored classic car, it’s probably worth more money than the cash value of an unrestored vehicle of the same make and model. Similarly, if you are still putting work in on the vehicle you may only want to insure for the work you’ve done, since you wouldn’t be paid for preexisting damage in the event of a claim. Either way, in order to repair your vehicle after an accident, you may wish to obtain a stated value policy.
A stated value policy insures a vehicle at that vehicle’s appraised value, not the value of other vehicles of the same type. This means that the policy will pay for damage up to the agreed-upon value of the vehicle. In order to obtain a stated value policy, you will need to receive an appraisal for the vehicle in question. You can then present this to your insurance company and request the appropriate type of policy.
Stated value policies may be cheaper or more expensive than standard auto policies, depending on the value of the vehicle. The higher the vehicle’s value, the more a stated value policy will cost. Depending on your needs, you might find it more effective to purchase a standard auto policy and customize it with the coverage you need.
Whatever your insurance needs, you should discuss your options with your insurance company. The representative will help you determine how much coverage you might need and balance this against the price you are willing to pay. While insurance does bring an extra expense to your restoration budget, it’s well worth it for the security against possible claims that could occur.