In a few weeks, the Dream Cruise will dominate Woodward Avenue in Detroit and the suburbs, with millions of dollars of classic cars cruising the strip. But just like any valuable collectible or antique, classic cars also need to be properly insured and reflected in the owner’s estate plan.
First let’s start with insurance. Obviously, everyone needs auto insurance, but the coverage and cost for a classic car like a ’57 Chevy, ’68 Mustang or ’69 Road Runner can vary based on certain factors.
For example, driving it daily versus just driving it occasionally in the summer can impact the rates you pay. You also need to factor in what the car is worth, because insurance companies will verify it with their own information. So just because you think that classic GTO is worth $45,000, it may be worth less. So it is important to come to an agreement on the vehicle’s worth so that you will get full replacement value if it is totaled in a crash or other accident. A starting point to help determine value may be ebay or other automobile collectible or auction websites, however, a written appraisal will provide more detailed information to the car owner.
You also want to make sure you are covered if you store the car at a facility that isn’t on your property.
While insurance on a classic car is critical, you also need to factor it in to your overall estate planning. For many people, owning a classic car is a labor of love. When you die, you certainly would want it to go to an heir who appreciates it and understands both its sentimental value, not to mention its dollar value. Upon one’s death one must decide who will receive the asset as it is not something that can be split to the heirs.
While the Detroit area will be focused on classic cars in the next few weeks, the importance of having the proper insurance and estate planning also applies to other collectibles or antiques, such as that Mickey Mantle rookie card, 1959 Gibson Les Paul guitar or your great grandmother’s Chippendale dining room set from the 19th century.
One mistake I see clients make with their collectibles is either not knowing how valuable something is worth or, conversely, how little it is worth. Just because you have something that is old doesn’t mean it is collectible or valuable. So if you have an old car you think is a classic, or an old guitar you hope is worth a lot, you may need to get the item appraised to find its true value for both insurance and estate planning purposes.