Insuring a “Hobby” Vehicle

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Savvy insurance shoppers know that if you have two cars that you use regularly, you can save serious cash on your auto insurance premium by putting them on the same policy and earning a multi-car discount, but what if you have a collectible car or an old clunker you almost never drive? Is it worth it to add it to your existing policy, or do you need to have coverage at all?

These kinds of cars are often referred to as “hobby” vehicles, and the answer to the insurance question depends on what kind of car it really is.

If your third car is a classic, collectible or modified vehicle, then it’s probably best to contact an insurer (Grundy is one, but there are several others) that specializes in insuring classic and collectible vehicles. These cars are highly specialized, rarely driven, and have value in their rarity and uniqueness that belies the conventional depreciation an older vehicle typically has.

While some collector car policies can be as inexpensive as $500/year with no deductibles, they also come with some serious restrictions, for example:

  • You’re required to prove that you have another car, with whatever amount of insurance is required by your state and/or finance company, for daily use.
  • You have to have an almost-perfect driving record.
  • You have to prove that your car is kept in a locked garage, or other secure location, when not in use.
  • You will have specific annual mileage limitations – often as low as 1 or 2,000 miles a year, and almost never above 5,000.
  • You may have to have the car formally appraised in order to determine value and coverage amount.

If your third car is just a spare that you don’t use much, you have a few options:

If it’s a car you keep at a vacation property, or is usually driven by a child who is away at college without the car, most insurance companies will let you suspend coverage when you’re not at the vacation home, or during the school year, as long as you really don’t drive it during those times.

If it’s just a spare, you can save money by doing the following:

  • Cut the coverage down to only the state-required liability and personal injury protection coverage.
  • Ask for a low-mileage discount (generally available for anyone who drives fewer than 14,000 miles a year, though in some states, the annual maximum mileage is only 10,000.
  • Consider a pay-as-you-drive program. In some cases these can be incredibly beneficial, as your premium is based on the miles you actually travel.

Remember that in order to discontinue coverage entirely, you must store your car on your property, and in some cities, it can’t even be on your driveway, but must be garaged, or behind a fence. However, cutting all coverage is not recommended, because you could still have an accident just moving it off the street.

The bottom line is that a hobby car or extra vehicle doesn’t have to be a financial drain as long as you talk with your insurance agent about the options that are open to you.