Rest Insured
Have you ever had trouble sleeping at night worrying about car insurance? Are you sure that your "dream truck" has enough coverage so it doesn't become a nightmare? Are you gambling that your project will be covered under your homeowner's policy? If you aren't sure on any of the above, maybe it's time you looked into your insurance coverage on your vehicles.
Seeking answers to my own personal concerns, I called upon Tony Lant of Lant Insurance in Toronto (1-800-461-4099) to provide me with the answers. Tony insures both classic and customised vehicles (which are often hard to insure) and is a huge supporter of car clubs, advertising in many of their publications.
A standard automotive policy relies on "black book", "blue book" or "red book" value, depending upon where you live. This assigned value determines the rate you pay for the term of the policy. In the event of an accident or loss, the amount you receive will be based on the depreciated value of the vehicle just before the time of loss. For a classic or custom vehicle, this should not be considered a good policy as most classic and custom vehicles will increase in value and therefore you cannot get the real worth of the vehicle
General automotive insurers will be gladto, for an increased premium, offer you a "Limitation of Amount" endorsement. In Ontario, this is known as a "19 Endorsement" and states the maximum dollar value they will pay for insurance purposes: It does not say, however that they WILL pay that amount, only that they may pay to that maximum. Policyholders may be fooled into thinking that they will get the maximum amount, only to discover later that they are S.O.L. This type of endorsement is definitely in favour of the insurance company.
Some general insurance companies, and all speciality companies, offer an "Agreed Value" or "Stated Value" policy. This is called a "19A Endorsement" in Ontario (notice the similar wording). As with most other auto policies, an appraisal must be done by a registered automotive appraiser. But with this policy, a total loss payout would be based on the actual "appraised value", undepreciated, and as stated.
I also talked to Tony about coverage for vehicles under construction. I've often wondered at what point do you make the decision to insure your project. Do you wait until it's -done,- done, or just before you paint it? Well, the answer to that should be another question: How much can you afford to lose? If $2,000 is a lot of money to lose, then you should insure it at that point, or maybe you can wait until you've got $10,000 into it. I think the real solution is to insure it when you get first get it. Your insurance premium on a proper "appraised value" policy is based on the vehicle's value, so it will only cost you relative to what it's worth. The only other cost will be the cost of the appraisal, which may also be lower due to an easier appraisal. You should also check with your appraiser to see if there is any way he may come and review your progress and offer a cheaper update for your insurance company, in order for you to keep your "appraised value" current with your progress.
A couple of other items Tony was able to clear up for me. Contrary to some peoples' belief, your project is not covered under your homeowner's policy. Read the fine print, as it doesn't apply to vehicles: No sense in finding out the hard way. I also asked Tony about coverage for a vehicle being transported by trailer, not my favorite way, but necessary for some vehicles or when you may be sending it out for repair (also not a favorite here) or for outside sourcing. He informed me that your vehicle is insured if it is on a trailer, but if you are having it shipped by someone else, you should make sure they have it insured to cover the value of the vehicle. In the event of a loss, you want them to bear the cost of the payout and therefore not affect your insurance rate.