Insurers offer hot rates on Hot August Nights classic cars

That guy who's showing a gorgeous '57 Chevrolet hardtop at Hot August Nights events this week very well could have paid more than $40,000 for a car that was listed for $2,304 when it was new.

But the insurance policy on the car probably carries a price that looks more like 1957 than 2010.

Here's why: Insurance companies know that folks who own expensive collectible cars probably aren't going to take them very often out on the streets among the six-year-old Dodge Neons.

State Farm, for instance, assumes that the classic vehicles it insures will be driven fewer than 2,000 miles a year, says Donna Fisher Brown, a spokeswoman for the company.

Jonathan Klinger, a spokesman for Hagerty Insurance Agency LLC, a Traverse City, Mich., company that specializes in collectible cars and boats, ticks off the reasons that high-value cars are a good insurance risk:

* They don't spend much time in shopping center parking lots where they can get dinged up or worse by an inattentive motorist.

* Owners usually don't commute to work in their 1949 Willys Overland, and usually have them on the street only for minutes at a time.

* Collectible vehicles by their very nature usually are stored in a locked facility, one of the requirements that Hagerty establishes for any of the policies that it writes.

"These people take much better care of these cars," says Klinger, whose company writes policies on more than 700,000 collectible vehicles.

That's reflected in premium costs, which often run about half as much as they would for a run-of-the-mill car that gets daily use.

Insurance for a 1966 Mustang, for instance, generally runs less than $300 a year, Klinger says, and premium costs have stayed flat for a couple of years.

In fact, insurance for a collectible auto is akin to insurance for a fine piece of art.

State Farm's policies, for instance, rely on an appraisal that establishes a value for the vehicle that's agreed between the owner and the insurance company.

That reflects near-certainty that a collectible vehicle won't depreciate over time and the likelihood that its value will increase.

On the other hand, State Farm's Brown notes that any damage to a collectible vehicle may require the services of a specialized repair shop that's skilled at finding rare parts.

But because the vehicles are driven so little and pampered so much, Klinger says claims are rare.

One of the biggest hits to insurers of collectible cars in recent memory came in January, when high winds topped tents at an auction of collectible vehicles in Scottsdale, Ariz. Dents and scratches from falling tent poles caused an estimated $1.5 million in damage.