An inquiry from a client brings to mind the problem of insuring an antique automobile.
Physical damage coverage on the typical auto policy pays for the “actual cash value” (“ACV”) of the loss. This is inadequate for the antique vehicle.
ACV pays the lowest of the following:
- cost of repair; or
- cost of replacement; or
- the depreciated value of the auto, that is, the Blue Book value.
Regular physical damage coverage paying ACV will be inadequate for a collectible car because in most instances the insurance company will pay the Blue Book value which will not reflect the real value. In many instances the Blue Book will not have a listing for an antique vehicle, and the insurance company will offer a ridiculous settlement, such as $1,000.
We recommend that the owners of collectible cars carry their insurance with a carrier that specializes in antique cars. Instead of ACV valuation, the owner should purchase “stated value” insurance. This will pay a defined amount for the total loss of the vehicle.
For example, the owner of a re-conditioned and mint 1960 Jaguar would get “stated value” insurance for the vehicle, such as $125,000. If he were to suffer a total loss the insurance carrier would pay the agreed amount of $125,000.
If you have been had the loss of a motor vehicle, please feel free to call me at 800-581-1434 or write to firstname.lastname@example.org for a free consultation.
Mark E. Seitelman, 8/31/09, www.seitelman.com.