Auto insurance rates in the United States have surged over the past few years, with the Consumer Price Index (CPI) showing a 51% increase in the cost of auto insurance over the last three years.
This rise is six times faster than overall inflation. Factors such as COVID-19's ongoing effects, along with an uptick in reckless driving, have contributed to the rise in rates. Increased speeding and drunk driving incidents have led to more severe accidents, resulting in higher claims for vehicle damage and injuries. The pandemic also exacerbated shortages in materials, parts, and labor, driving up repair costs.
While all drivers have felt the impact of these increases, owners of classic, antique, and custom vehicles have been particularly affected.
Despite being statistically less likely to file claims, these collectors face the same rising premiums. In many cases, insurers do not offer discounts for owners who drive their collector cars less than the typical 12,000 miles per year. As a result, these owners are, in effect, subsidizing the losses from higher-risk drivers.
For these collectors, experts suggest considering "unbundling" their insurance policies. Many drivers bundle their auto and home insurance, thinking it will reduce overall costs. However, for collectors, bundling can lead to coverage gaps.
According to Richard Hutchinson, chief executive officer of OpenRoad Insurance, the majority of the 40 million collector vehicles in the U.S. are insured through standard auto insurers, which may not provide the specific coverages these vehicles require. Hutchinson advises collectors to explore alternative options that provide more appropriate coverage for their needs.
"Our message to auto collectors and agents or brokers serving this community: consider unbundling and saving on more appropriate and comprehensive coverage," said Hutchinson.
In addition to overpaying, many collectors face insufficient coverage. Standard auto insurance often does not guarantee the use of original parts for repairs or ensure that repair shops are qualified to handle classic vehicles. This can jeopardize the authenticity and value of these vehicles.
Justin Moreno, OpenRoad’s chief marketing & communications officer, explained that standard coverage is based on depreciated market value, which does not reflect the true replacement cost of a classic car.
"These vehicles require coverage that considers their true replacement cost, assigning a market value that takes into account their condition as well as the owner's investments. We provide that as well as expert claims handling and many other protections that are better suited to the needs of the collector car community," said Moreno.
Recognizing this market gap, OpenRoad Insurance was launched in 2024 to offer tailored coverage for classic car owners. Their policies are designed to provide agreed-upon values based on the true market worth of these vehicles, considering factors like rarity and condition.
Do you think classic car owners should consider specialized coverage over standard policies? Share your thoughts in the comments.
