Insuring Non-running, Non-registered Project Cars

This post started off as part of a discussion started by a member on the MGExperience message board about being cancelled by his specialty insurer after having a claim. I also posted it to BritishV8 where it seemed to have devolved into a pissing match of sorts about who would or would not insure a non-running project, a collector car, or modified vehicle. So I’m re-posting here because this humble little site has attracted more adherents than the original band of thieves and felons (smile here) I put it up for and because I think the information is valuable to anyone who is working on a project car and hasn’t thought about or has made assumptions about insuring it against loss that  may not be true.

First, I am NOT an insurance agent and don’t purport to be so you need to do your own discovery and fact checking. This is also by no means the definitive statement on insuring project cars. Your experiences are going to vary from state to state, from insurer to insurer depending on your policy and the current condition of your project. I think, more to the point, is you need to be thinking about it. Herewith, the sum of my recent experiences.

Insure It
If you have a project car, do not assume that it is automatically covered under one of your existing home or auto insurance policy provisions. As it turns out, different insurers and, to some extent, different states have different definitions of what constitutes an “automobile”. This isn’t a nit to be picked, it turns out to pretty darn important. For some it needs to be running, for others it needs to be registered, for still others it needs to be both running and registered or neither to be covered under your automobile policy.

Confused? So was I but the gist is, some insurers and and some states apparently do not consider your project an actual automobile until it’s legally on the road. Until then, it’s considered personal property and is not covered by the same policy provisions as your vehicles and may be subject to restrictions under your home owner’s insurance. The bottom line is – call your agent or you insurer and make sure you find out. Then get yourself covered. The last thing you would want to happen is to have a problem and find out your not insured or fully insured for the claim.

Know Your Options
This is where some of the discussion on the two previously mentioned message boards started to disintegrate as posters seemed to feel that their personal experience was the definitive norm and wanted to defend it. Really, who tries to win a discussion? Ah well, I digress. Here’s what I found out.

I have a specialty car (to say the least) and assumed that my best choice to inure it would be a specialty insurer who was in the business of covering these sort of things. I thought that they would have the knowledge as well as understand and be sympathetic to the circumstance and they may well…but that wasn’t my experience. I called both Grundy and Haggerty – two of the more well known specialty insurers – and in both cases was told that they would be happy to insure my project if I would also insure my daily drivers with them. Call me naive, but I was surprised. After their initial pitch, I went back to both them (via e-mail) and asked if, under any circumstances, would they insure my project without my drivers. I am still waiting on their responses.

This last point seem to set some folks off who felt the need to defend either Haggerty or Grundy because their experience was different than mine. If we dispense with who needs to be “right” or “wrong” here, I think what you get is what I put out at the beginning of this post, your rates, your insurability, the conditions under which a company may be willing to underwrite your policy seem to depend a good deal on your current relationship with an insurer. In my case, both the conditions and the quoted costs of using a specialty insurer were prohibitive. You may find out something different.

In the end I called my local agent and asked him to look into it for me. The result was a quote for $46.70 to cover my project for the next six months. No, I didn’t put the decimal in the wrong place. Less than $50. Based on the responses to the original posts, I suspect if my current insurer had been Grundy or Haggerty, I may have very well received a similar number from each of them.

Learn the Lingo
The specifics of the language in your coverage are going to matter a great deal if you have a claim so it’s in your best interest to at least learn the ones that are going to be really significant. Here are the three that seem to make the biggest differences when it comes to paying a claim.

  • Agreed Upon Value – What’s your baby worth? With “agreed upon” coverage, you and the insurer come to a mutual agreement about what you project is worth. Seems fair, right? For the most part it is but be aware, if you agree to say a $10,000 value and the claim is $10,001, they’re going to hand you a check for the 10 large and then own your car. Period. So make sure you don’t under insure just to save a couple of bucks. It could come back to bite you in the event of a claim.
  • Stated Value – This is when either you or your insurer establish the value of the project unilaterally. My understanding is that either party can stipulate the value but, if you do and they accept the figure, it is no guarantee that it won’t be challenged if it comes to a settlement. My take is, that this kind coverage is best left to your daily driver or cars for which there is substantial evidence of value.
  • Attached Building – For many of us this means the garage but to an insurer it has more meaning because, I’m thinking, the location of the building where your car is goes directly to the probability of a claim and/or the typical pay out in the event of a claim. The “where” matters because it may go to which part of your policy covers a loss. I don’t think it’s a leap to think that my garage is part of my house. After all, it shares a common wall. Not so. My garage (and I suspect most attached garages) is considered an “out building” because, while it appears to be part of the house, it stands on an independent concrete slab and the common wall is actually considered to be exterior. I’m almost certain that all of this nuance has to do with the actuarial tables on all of this but, again, the point is to find out what your policy says and under which provision(s) you may or may not be covered.

Document Your Project
Thankfully, I’m pretty anal when it comes to keeping track of things and have, generally, been pretty decent about taking photographs to document my progress. I’ll acknowledge that I didn’t do either because I thought they would any other future use than entertainment but it turns out to be different…my build sheet, my receipts, and this pictorial evidence on this web site (truly) became important evidence in establishing agreed upon value and in helping the insurer’s underwriters come to their determination about insurability (and their risk). Who knew?

The Last Word
Looking back on this experience, I feel like a bit of an idiot. It all seems so, so sensible. And, for someone who is as thorough as I typically am, so completely and utterly out of character. The simple fact is, I didn’t think about it. But I should have and so should you. The last thing I want is to have something happen to the $25,000 or so project I have in my “attached building” and get a handed a check for $500 because that’s all my insurance policy covered.



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