Why insurance may not cover full value of older cars

Person hands off car keys
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Soaring used car prices could impact people even if they are not in the market to buy a vehicle.

People driving vehicles more than 10 years old may now be under-insured.

Herm Harrison has a 20-year-old Ford Crown Victoria. A few months ago, someone hit his pride and joy in the rear quarter panel.

“The body shop pulled it out, straightened the panel, and painted the rear,” he said.

When he asked his insurance company to pay the $3,000 repair bill, he was stunned by the answer.

He got a letter stating the repair cost was more than half the car’s market’s value, which meant that they would be “totaling” the car and giving him less than $2,000 for it.

“They offered me $1,800, something of that neighborhood, if I wish to retain the car,” he said. “And then they would assign me a salvage title.”

Cars are worth more in current market

Harrison says he sees Crown Victorias similar to his vehicle selling for between $6,000 and $10,000 on Auto Trader and eBay. He said one recently went for $14,000.

Jonathan Klinger is a vice president with Hagerty Insurance, which specifically offers insurance for older vehicles and collector cars.

He says people with older cars should ask for “stated value” coverage, with a specific worth if it is damaged.

“The value of the vehicle, its market value, is agreed at the time the policy is issued,” Klinger said about the policies he offers. “If something terrible is to happen to the car, and it is a total loss, there are no questions, no determining the value at the time of the loss.”

Without a “stated value” policy, Klinger says a fender-bender could leave a driver thousands of dollars in the hole.

“I’m going to take a substantial financial loss through no fault of my own, and that doesn’t seem like the ethical thing to do,” Harrison said.

Harrison’s insurer has agreed to take another look at his situation. But if they decide not to offer more money, he may have to live with their settlement.

So, ask about “stated value” insurance for an older car so you don’t waste your money.

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John Matarese

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