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To many readers insurance is probably considered confusing and uninteresting, something to be done once a year and as quickly as possible! However, a little time spent in understanding the basic principles and what to look out for can pay dividends in ensuring you obtain precisely the insurance cover you need for your M.G. or other Classics with an insurer/broker combination that you feel comfortable with and at a premium which is both value for money and competitive.
Recent years have seen an explosion in the availability of specialist schemes for the Classic Car enthusiast as more insurers and intermediaries have realised the increasing size of the U.K. Classic Car market, now estimated at about half a million cars. In the mid 1980s there were probably less than six major brokers or intermediaries specialising in this market; today, you can count over forty in the pages of the classic car press.
I have there written this article in the hope that it will be of interest, not only to the first-time M.G. owner, but also to those of us who have owned cars for years. What I have done, therefore, is to provide a series of questions and answers that most frequently arise.
How do you define a classic car and whether it qualifies for a classic car policy?
I prefer to use the term "collectible car" since this is more wide embracing. Morris Marinas, for example, are hardly classic car in the true sense, but there is an enthusiasts' club for them and they are perfectly eligible for classic car schemes. Historically, to qualify for a classic car scheme the car, typically, had to be over ten years old and desirable on the grounds of marque or pedigree, but the emergence of schemes for future classics such as new Morgans or our own M.G. RV8 and MGF have changed the scene considerably. The market has certainly widened to the extent that even cars such as the East German Trabant are now being covered.
What are the differences between a private car policy and a classic car policy?
In general terms, and I stress there are various shades of grey, a limited mileage classic car policy will normally have certain features that a standard car policy will not have, and vice versa. For instance, a classic car policy can be expected to have an "agreed value" stated in the schedule in the event of a total loss claim, rather than a market value which will be open to negotiation, having regard to the market value of that car at the time of the event giving rise to the claim. The policy may also be restricted in the amount of miles the car is allowed to do in the course of the year, mileages of 1500, 2000, 3000, 4000, 5000, 6000 and 7000 are offered in the market - dependent, of course, on scheme or general underwriting criteria, and frequently today, unlimited mileages are also available agreed value.
The third most important point is that in most cases, a no claim bonus proof is not required to be submitted. Limited mileage classic car insurance works on the basis that the proposer (and named drivers) have good driving histories with a satisfactory bonus on their primary car or a good driving record, if a company owned car. The policies are therefore, what is called, "flat rated".
Some schemes require the existence of a primary car for 'everybody' use - others do not - a point to check - as is the facility to commute to and from work. Garaging and security are very important. It takes a lot of £150 premiums to pay for a £30,000 classic which has been stolen. Secure night-time garaging at the owner's address is mandatory for some schemes, particularly for higher value cars. Expect to pay more therefore for driveway or street parking.
Private Car Policies, on the other hand, do not normally have mileage limitations, although with today's quotation systems there are often premium reductions for restricting mileage. Good quality comprehensive policies normally include business use by the proposer and spouse and, of course, commuting to and from work. Business use is not always available on a limited mileage classic car policy, neither is the "driving other cars extension" (aleit third party only) normally found as standard on most comprehensive policies.
Whereas a "flat rated" classic car policy assumes you are "innocent until proved guilty" the traditional method of assessing rates for private motorists has been via the no claims bonus system, eg. 1 year 30% discount; 2 years 40% discount etc. It was this cumbersome approach that, many years ago, encouraged me to develop flat rated schemes for those club members with several classic cars, to overcome the tedious job then of building up an NCB on each car, which if nothing else was quite a deterrent to purchasing anything interesting that might come along. The last ten years, however, have witnessed a raft of new classic car schemes which have completely removed that problem!
An article of this kind cannot possibly cover all the minor variances in policy terms and conditions, but other considerations such as the proposer's age, location, occupation, driving record, all help to decide whether someone is eligible for a classic car policy. With the choice in the market today, it is well worth asking.
How is the agreed value arrived at?
The normal practice is for the proposer to state on the proposal form what he/she paid for the car, and when, and what in his/her opinion is the value now, having regard to the condition declaration also included on the form. Together with 4-6 good, recent, signed photographs (not Polaroid's) this is normally sufficient to make a judgement. In our case, if the value requested is way in excess of our view or the values shown in the leading classic car magazines, then an independent valuation may, in rare circumstances be requested. Occasionally, the converse is true, and we then discuss with the client where the value of the car appears too low.
Some intermediaries make a charge for valuations-we do not- as we see it as part of the underwriting process which we carry out on behalf of insurers. As far as photographs are concerned, normal requirements are for both sides, front, rear, engine compartment, interior and boot.
What happens if a car is being rebuilt?
Firstly, where is the car being rebuilt? If the work is being carried out by a restorer on his premises, for example while in the process of a major rebuild, then you should ensure that the restorer has adequate motor trade insurance in the event that your car is lost or damaged while in his "custody or control" to use the terminology. You should ensure that a written and pictorial record is maintained and kept off site so that in the event of a loss, the insurers are aware of the condition of the car immediately pre the event. We offer a specialist policy precisely for the professional restorer.
If the rebuild is being carried out in your own garage then an "off road" policy is likely to be suitable, particularly where you don't expect completion within the next year. The cover given includes accidental damage - we have had falling paint pots from shelves as well as a roof falling in through gales and flood and mud damage. The average premiums are normally quite low as there is no road risks cover.
If you foresee the car being back on the road within the next year, you may be better advised to start, say, a 1500 mile on road policy. If nothing else, when the time comes, you will be able to tax and MoT the car, take it to the trim or paintshop, or whatever. The difference in premium is small, but the convenience of only doing the basic insurance paperwork once (apart from photographs and up-to-date agreed value) could be appealing.
Incidentally, when a long term rebuild is involved and considerable tranches of cash are expended, do remember to keep the value up to date by submitting photographs of progress and written evidence of work carried out - invoices etc. Otherwise you will only get paid out the value agreed previously in the event of a claim.
What about Garaging and Security?
The biggest threat to increased premiums in recent years has been increasing levels of thefts. Vehicle security and lifestyle of the proposer helps the broker or intermediary to understand the risk. A Porsche 911 parked in the street in London or Manchester is unlikely to be an attractive proposition. Certain cars have featured consistently over the years in the theft league - Triumph Stags and Datsun Z models come to mind. Whenever we lose an MGB more often than not the thieves have chosen a nice one - they know what they are looking for. About two years ago we had a lady Mercedes owner who, it transpired, was followed to North Wales. Despite elaborate security precautions on her part in the hotel car park, the £30,000 car was gone next morning, never to be seen again. The thieves, apparently, came from Bristol and were utterly professional. So be warned! The higher the value of your car £20,000 - £30,000 say, the more likely you are to be asked to fit some security - Tracker or Trakbak probably being the most appropriate for our type of cars - particularly if you live in metropolitan areas. The trauma of losing a treasured possession has to be worse than parting with a cheque for an appropriate deterrent!
Also do the obvious, put your car away in the garage and lock it up when you are at home. Insurers are not impressed when they learn your car was stolen from outside you front door when you've got a perfectly good garage. If for no other reason, premiums are often lower for cars which are habitually garaged.
What do Insurers not like?
Different Insurers have different dislikes. Clearly, drivers with any history or drink driving, driving without insurance, dangerous driving are going to have a difficult time. Accidents where only the proposer's car is involved, especially late at night, raise questions and if you live in many metropolitan areas the incidence of damage, accidental or deliberate, especially if the car is ungaraged, is magnified.
Insurers also do not like being told after the event that something has happened.
If, for example, you need to increase your mileage or add another driver, talk to your broker or intermediary first. As the title of this article says - Do not expose yourself to the possibility of non-disclosure. In extreme cases the Insurer could decline your claim. If in doubt advise your broker.
Does it pay to be a club member?
Experience has shown over the years that restricted club schemes tend to have a better claims record than open market schemes and hence many schemes, such as the Abingdon Policy, are able to reflect this experience in the premiums charged. Quite apart from this the Club benefits from having established, proven schemes. Our won business, arguably, has produced more new club members over the last decade than any other source outside the Club Office - something that Mike Hawke alluded to in his Chairman's notes recently. Our staff always sell the M.G. Car Club to any non-member with M.G. In addition, by taking extensive advertising in "Safety Fast! the Club gains financial benefit here also.
One other benefit of Club Membership is that we have, after many years, agreed with one Insurer, Cornhill, to offer a scheme for M.G. Car Club members in Northern Ireland - a market where many Insurers do not offer motor insurance. Cornhill, however, is one of the leading players in the Province and I am delighted to say that at least we have something to offer our Ulster Centre friends.
Finally, what about Insurers and Brokers
There is a small number of insurance companies which have been in classic car insurance for a number of years. Equally, there are new players. Those who have been in the business longer will, obviously, have built up more statistics. It is our view that clients prefer steady rates year on year, not a yo-yo effect. None of us likes unpleasant surprises, when it comes to council tax, electricity or even insurance bills! Premiums have been drifting lower since 1994. Some would argue that we have now reached the low point on the cycle and that classic car premiums will start to shadow those of private cars which are starting to move slowly upwards. With our Insurer partners we will always try to take a longer term view.
In terms of choice of Broker or Intermediary you only have to look a the Classic Car Press to see the options open to you. You should, perhaps, be aware of the legal distinction between Brokers and other intermediaries. A firm can only be called a Broker if it is registered with and regulated by the Insurance Brokers Registration Act of 1977. The IBRC membership comprises firms who have freely volunteered to be subjected to the regulation and compliance in the interests of the consumer and as evidence of adherence to professional standards of operational and financial behaviour. It is legal regulator - not a cosy trade body.
As a final thought, always double check the documentation immediately you receive it from your broker or intermediary to ensure that the policy schedule and premium shown is exactly as you understood it would be and that in all respects "you are properly covered"
Peter Best is a director of Peter Best Insurance Services Ltd, Insurance Brokers and Specialists in Scheme Management, particularly for Classic Cars. He was also a Director and Vice-Chairman of the M.G. Car Club, working particularly hard and effectively with the building appeal that secured our Club premises in Abingdon. The Abingdon Policy referred to has been an approved M.G. Car Club Scheme since 1985.