Classic Car Insurance

Depending on how old your classic is, what make and model you have and how you intend to use it, there are three levels of classic car insurance cover to choose from:

• Comprehensive Classic Car Insurance – Comprehensive insurance incorporates all the cover form a Third Party, Fire & Theft policy, but also provides cover for the cost of repairing or replacing your car if it is damaged or written-off in an accident where you are at fault. Similarly, it includes cover for the cost of medical treatment if you or your passengers are injured in the accident.
• Third Party, Fire & Theft Classic Car Insurance – Third Party, Fire & Theft Insurance is almost identical to Third Party Insurance, except for the inclusion of cover for the cost of repairing or replacing your classic car if it is damaged or destroyed in a fire or theft. It also provides cover for a replacement if your car isn’t recovered after it has been stolen.
• Third Party Classic Car Insurance – Third party classic car insurance provides cover for the cost of repairing or replacing third-party vehicles and objects that are damaged in an accident where you are deemed to have been at fault. It also provides cover for the cost of medical expenses if a third-party is injured in the accident. As the name suggests, it doesn’t provide cover for you or your car.

If your classic car isn’t SORN, the law states that it must be covered by a valid car insurance policy. What the law doesn’t state is that it has to be a specialist classic car insurance policy; it could therefore be a standard policy.

However, some mainstream insurers try to steer away from insuring older cars and in the process either load the price to put you off insuring with them or decline cover altogether. With this in mind, you should consider a specialist classic car insurance policy, not only because of the potential savings, but because the cover will likely be better suited to the needs and risks associated with driving a classic.

Ask a group of classic car enthusiasts what they’d define as a classic and you’ll likely get a different answer from each of them. The same can be said for classic car insurers, however, as a general rule of thumb, a car is considered to be a classic if it is over 15 years old. However, within this ‘classic’ status, enthusiasts often refer to sub categories such as ‘modern classic’ (anything post 1976) and ‘true classic’ (anything pre 1976 and therefore road tax exempt).

An unrated insurer is an insurer that does not carry an insurer financial strength rating given by international rating agencies, such as Standard and Poor’s 500 index (S&), Moody’s, Fitch Ratings and A.M. Best. An insurer financial strength rating ‘provides an assessment of the financial strength of an insurance organisation’ and its ability to pay claims to its policyholders.

Each agency has its own methodology, but ratings are usually organised on a scale based on letter grades to indicate the degree of credit risk. For example, an ‘A’ rating means that the insurers have an excellent ability to pay out claims, while a ‘C’ rating means that the insurer has a weak ability to pay out claims.

Some unrated insurers have been trading in the United Kingdom for many years, and so failure is not seen as likely, but this is not any sort of guarantee and such firms can fail given the appropriate combination of circumstances. However, just because an insurer is rated does not mean they cannot get into difficulty.

Risks of using an unrated insurer include:

• Unrated insurers may be based overseas and outside the influence of UK regulation. The home state regulation they are subject to may be less intrusive, less rigorous or a lighter touch than that of the UK Prudential Regulation Authority (PRA) / Financial Conduct Authority (FCA).
• In the event of an overseas insurer failing, claims may have to be directed to an overseas equivalent of the UK Financial Services Compensation Scheme (FSCS), and this may bring delays in dealing with the claim.
• Unrated insurers lack independent corroboration of the quality of their current financial stability. As your Insurance Broker, we carry out monthly due diligence checks on our entire panel of insurers, Underwriting Agencies & Managing General Agents and the underlying insurance provider. We are confident in the panel we choose to do business with.

Some of the benefits of using unrated insurers include the following:

• You may only be able to source cover from an unrated insurer due to your particular circumstances
• They may offer comparably lower prices than an alternative rated insurer
• There is no legal requirement for an insurer to be rated; brokers are not obligated to restrict placing business with rated insurers only