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Classic and Collectable Late model Automobile Insurance Companies

Insuring Your Corvette

What should I look out for when insuring my Corvette?

STATED AMOUNT

Research has revealed there are, in fact, two types of stated policies. One is a stated amount policy in which the premium is based on an amount stated by the insured. Losses, however, are still based on the actual cash value (ACV) of the property at the time of loss, but not to exceed the stated amount. To pay the stated amount automatically would create a moral hazard in that policy holders could overvalue their cars, thus making a profit. This is contrary to the basic principle of indemnity which is to restore a person to the position they were in before the loss. (Some companies effectively remove the moral hazard by having their agents inspect the car prior to issuing the policy.)

AGREED VALUE

The other is a stated value or agreed value policy, which is a true valued type of policy where both parties agree, in advance, as to the value of the property. In the event of a total loss, the company will pay the full face value of the policy. It turns out this is an Inland Marine type of policy generally used with works of art, boats and other marine equipment. There are a few companies, however, that do offer it as an automobile policy. This difference may be the reason for the wide misconceptions about stated value policies. Eleven different agents were asked how the company would settle a stated value policy. None of them corrected the question by saying they were actually *stated amount* polices, five of them said the company would pay the full stated amount and five of them did not know. Only one actually knew the company would not pay the stated amount in the event of a total loss. He said he chose not to sell that type of policy because the insured pays an additional premium and receives no additional protection. Jn fact, the insured receives less protection. The standard indemnity policy pays the ACV at the time of loss with no limit on the company's liability. The stated amount policy still pays the ACV at the time of the loss, but the company's liability is limited to the stated amount. For example: Assume a car has an ACV at the time of loss of $10,000. For an $8,000 stated amount policy, the company would only pay $8,000, where they would pay the full $10,000 under a standard indemnity policy. The insured pavs an additional premium for the 'privilege" of limiting the insurance company's liability.

The words STATED AMOUNT on the declaration page is a red flag. Read the respective endorsement very carefully. More than likely, it is based on ISO form E167 which states:

"The limit of the company's liability for loss shall be the lesser of:

(a) the stated amount shown in the Declarations,

(b) the actual cash value of the stolen or damaged property, or

(c) the amount necessary to repair or replace the stolen or damaged property."

Unless it was written by one of the few companies issuing such policies, you probably will find the policy does not say the company will automatically pay the stated amount in the event of total loss. In addition, discuss this with your agent immediately. Ask the following questions:

1) Will the policy, in fact, pay the stated amount (agreed value) in the event of a total loss?

2) If no, why did you buy it?

3) If yes, have him show you where it says that in the policy.

4) Will the company insure the same car under a standard indemnity policy?

5) If so, what would be the premium?

6) What additional consideration are you receiving by paying the additional premium?

Remember, have your agent show you, in writing, where it says the insurance company will pay the stated amount (agreed value) in the event of a total loss.

If you have a stated value policy and have not yet suffered a loss, it is suggested, in the strongest possible terms, that you read it, paying particular attention to the section entitled "limits of liability.

Other Insurance Tips

Discuss and have the insurer put in writing that in the event of an accident or damage they agree to use correct, authentic components to make the necessary repairs. This is very important. We have seen estimates with the use of generic, over the counter components to replace expensive and hard to find items like horn assemblies, headlamps, fiberglass etc.
Also, have your insurance company AGREE that they will pay to have your car repaired by a specialty shop. One equipped for and familiar with the correct repair of a Corvette, vintage or late model.

Know your rights– You have the option of taking your Corvette to the shop of YOUR preference.

Understand Restrictions– Many times restrictions are overlooked. Don’t take anything for granted. You may find that your not covered at all in certain situations, such as leaving the car in a garage other than the one stated in the policy.

Don’t put you Corvette in harms way– If you ever have you Corvette transported or worked on by a shop, make certain that they have adequate coverage ( or insurance at all!) Don’t make any assumptions!