Classic car insurance part 2
Classic car insurance part 2
Last week I addressed coverage of your XJS or other classic and how to deal with the adjuster when you have a claim. This week lets talk about the one thing that causes collectors to shake in their boots which you could crawl under the bed with your index fingers in your ears when the adjuster shows up with that look on their face. You know the look that makes you look over their shoulder for the choir softly singing songs for those in mourning in a Jaguar cemetery as someone is standing beside you patting you on the back with their head looking down while offering you a very large crying towel! Oh yes, you know where this one is going!
So the car is totaled by the adjuster. Now there are two main reasons for this when dealing with a classic. The first is the worst, a very bad wreck and the other is even more disturbing because the damage does not look too bad. So you ask why this happens? Here is the skinny on this. It is easier to make a totaled assessment which most times is what you can expect from a less informed adjuster who tends to total too many classics just because they cannot find the needed parts and they are not motivated to spend much time on the search for availability of such parts. I had an insurance adjuster located in Nova Scotia call me back in 2006 seeking tail lamps for a 95 XJS with less than 9,000 mi and he was told to total the car because Jaguar no longer had them, but the owner pleaded with the adjuster not to total it so he was given one more week to find the needed parts. The only damage was a couple of scratches on the bumper cover and damage to four of the six tail lamps. I saved the day and the lady owner was relieved that she could continue to enjoy her beloved car. Therefore, if your adjuster indicates that they are ready to total the car when there is little damage and you love the car, then you should tell the adjuster to allow you to find the parts but do not accept a check from the insurance for the parts until you have found them so you can get enough to cover the cost of the needed parts. The repair cost is easy as it is mostly by the hour and materials. On the other hand, if you are all dressed in black and all the other surviving cats are crying, then you need to do some homework. Most importantly you need to understand these three insurance terms that you will hear and if not, then it will help you to know and by mentioning them to the adjuster, there will be a shift in the conversation letting them know that you are an educated client. Here they are.
1) Diminished value.
This is applied to the total damage and determined by who they consider who is at most fault in the accident. Then they Calculate the "base loss of value." Insurance companies commonly divide the NADA Guide value by 10 to arrive at a "base loss of value, but with an emerging classic such as the XJS, it may be a couple of years before NADA publish solid up to date numbers. This method is also used when selling your car in the future to a buyer who knows of previous damage as recorded by the insurance company when you make a claim.
2) Accelerated depreciation.
This normally applies to a car used for business. When this method is used, an asset loses book value at a faster rate than the traditional straight-line method. Therefore, you want to know what method is being used, but accelerated depreciation is no friend to any classic, so be sure you both are on the same page because you could be leaving thousands on the table.
3) Agreed value.
This method is popular with classic car insurance specialists like Hagerty and Grundy and is exactly what it sounds like. You and the provider in such a case agree on a current value of the car including restoration cost if this applies provided you keep all receipts. Now here is the kicker! If your car is an emerging classic, then you need to have them reset the agreed value. Therefore, it is wise to on occasion check the market. Being a member of a club-specific to your car and forums will keep you in the loop as someone will always address in discussions.
Once it is clear what method your insurance is using, you must do some research by checking real current appraised value by checking the most recent auction sales of your classic. You should visit the websites of the major houses. Bonham’s, Barrett Jackson, and Sotheby’s. There are others but these are known to represent the best quality of cars. Look at the sales for your model for the last two to three years but you also must pay attention to the condition and this is where you need to look at your car's condition prior to the accident as if you were buying it and not settling for a claim. Study the photos of the cars auctioned and if your car is not in similar condition, do not lie to yourself because I have news for you, the insurance adjuster will be looking as well. Once you have your results, present them to the adjuster and be kind to them. You do not have to bake cookies but at least put that bad dog away. You know the one that bites the nice lady down the street on walks.
When shopping for classic car insurance, it is best to ask the questions upfront as to the methods they use and know what you are signing up for. Enjoy your classic.