With winter well and truly upon us, now is the perfect time to avoid the bad weather and get working on your car restoration projects, ready to show off in the summer.
There are many types of insurance that you may need as a classic car enthusiast or car restorer. It maybe that you keep your classic car or other vehicle off road to work on over the weekend or keeping a vehicle SORN and in storage for protection of your investment.
Whether you are looking at laid up insurance or motor trade insurance, storage, liability or equipment and tools cover, Tradex has specialist expertise in this area. Here is our advice to keep you covered.
A Lucrative Investment
Whether it’s just a part-time collectors’ hobby on the side or you operate a garage specialising in high end vehicles, the classic car market remains one of the most sought after and lucrative areas in the motor trade.
Classic car collecting remains one of the most profitable areas of the motor trade as evidenced by a recent story in the Daily Telegraph newspaper. It cites supercar trader Gregor Fisken who bought a 1962 Ferrari 250 GTO in October 2017 on the premise that its missing original gearbox would be sourced and later handed over.
However, the US seller claims Mr Fisken argued over the logistics of delivering it and has breached the terms of their contract, meaning he no longer has any rights to it. The total cost at stake is an eye watering £37million.
Now, most of us won’t be arguing over such heady sums, but you should get as much protection as possible when dealing with high value classic and collectible cars.
What is a Classic Car?
According to the HMRC , a car has to be at least 15 years old to be deemed a classic, and its value should be £15,000 and above. For most people the terms ‘classic’ and ‘vintage’ are identical, but they can mean different things. A vintage car is one that was made between 1919 and 1930. A classic car is typically any car that is no longer in production, but remains popular, such as a Ford Capri.
It is worth remembering though that different insurance companies have their own criteria for classic car benchmarks, so it’s important to shop around for motor trade insurance. Included in the criteria can be collectors’ cars that have been modified, vintage and classic cars, reproductions and replicas, restored classics, modern classics and antiques. Classic vans, haulage and commercial vehicles can also be included.
Getting the Right Insurance
Your insurer should provide a motor trade insurance policy that covers your own permanently owned road vehicles (including classics, everyday cars, vans, motorbikes and agricultural vehicles) or those being tested, demonstrated, delivered or driven to display meetings.
Cover should include premises, storage and refurbishment as well as liability cover for both public and employers’ liability (if you have employees) as well as equipment cover for fixed plant and machinery and tools.
Taxation and Premiums
There are significant tax issues associated with classic cars and the motor trade. From April 1st each year, cars produced more than 40 years before 1 January of that year are normally exempt from paying Vehicle Excise Duty (VED) or road tax. In addition to that saving, from May 2018, nearly all cars built more than 40 years ago are also excused from paying the annual MOT roadworthiness test, though it’s recommended that owners voluntarily have their vehicle checked.
One of the essential differences between conventional car insurance and classic car insurance is the perceived valuation of the vehicle itself. Everyday cars will depreciate over a period of time, some more so than others. Yet with classic cars they tend to appreciate in value especially if they are in the middle of being restored.
Older cars are generally cheaper to insure. Insurers view classic car owners as more likely to take good care of their vehicle, to drive less miles and not to drive at night too often.
A Word About SORN
SORN stands for Statutory Off-Road Notification and it is used to inform the driver and Vehicle Licensing Agency (DVLA) that you are registering a vehicle as off the road. This means the vehicle can’t be driven on a public road when it has been declared as SORN.
If you have a vehicle and have no intention of driving it on the road, you must inform the DVLA by officially registering the vehicle as being off the road. Declaring SORN means the car’s owner can avoid paying both vehicle tax and road insurance. You cannot just stop paying tax and insurance. Motorists can be fined £80 for failing to tax a car if it hasn’t been declared SORN.
Vehicles kept under SORN can still be covered for fire, theft and accidental damage insurance as indeed vehicles in the course of restoration. This is generally covered by laid up insurance.