Michael Harrison – Having been a lawyer focused on insurance matters; more specifically auto insurance especially for used cars, I can attest that there is much that meets the eye in the used car insurance market.
My practice is located in Houston, Texas; over the years, my practice has served an array of clients who have successfully bid for used cars through online auctions, but have run to various insurance difficulties.
While these vehicles are more likely to be cheaper than new vehicles and in some models, offer the chance to get hard-to-find classics, there are peculiarities connected to insurance.
This piece goes through these evils and illustrates a case for a client to insure a 1970 Dodge Challenger purchased at Houston car auction.
The Problems with Insuring Used Cars
Complexity of Valuation
The major problem associated with insurance of used cars is determining the actual value of a car. Whereas the value of new cars is rather obvious and can be linked to the suggested retail price set by the manufacturers, used cars are much more diverse in terms of their quality and price. This variability makes the task of fixing the correct insurance premium a tad challenging.
Increased Risk Factors
It is critical to note that any used car particularly those of old model come with high risk factors. These are the likelihood of mechanical failure of the car, high mileage, and outdated safety features.
These strings are taken by most insurers into consideration and this leads to a reduction on the insurance premiums for new models and relatively higher premiums for older models. The Texas Insurance Code notes that this aspect remains crucial in the determination of premiums, and there should be factors of age and condition of the vehicle in the insurance tariffs of the state.
Documentation and History
Another remarkable aspect should be the paperwork of the vehicle and its past. Used cars that are gained from online auctions might not have proper records of services or even the previous accidents that they experienced.
This lack of transparency impacts the insurance as insurers have to gather extensive information about the risks. The Texas Department of Insurance also has programming requirements that at the time of insurance every vehicle must have a clean title and also a history in regards to its usage.
The Attraction to Online Auctions
Cost-Effectiveness
Nonetheless, the growth of online auctions is explicable by the matter of efficiency in cost. A car that is sold through these online platforms is relatively cheap as compared to one sold through gasoline dealers. Buyers having limited purchasing power or those seeking precise makes like second hand automobiles, online auctions are a good choice.
Access to Rare Models
Besides, the options to access rare and classic models which are not available in the market via conventional sale are another advantage of online auctions. Bidding enthusiasts and collectors make these auctions their primary source to get classic cars which they can fix and use. However, getting them insured is sometimes very hard mainly because their evaluation is quite complicated and the insurance policies required are specialized.
Case Study: Do you need Insurance for Your Classic Automobile?
The Client’s Purchase
Lately, I worked on the case of the client who had bought a car, a 1970 Dodge Challenger, at Houston car auction. The buyer received the car with much enthusiasm but quickly discovered it was not easy to insure the classic car.
Services of a Legal Advisor for Registration and Insurance
First of all, we checked all the papers of the vehicle. This entails getting the ownership documents and conducting a background check on the vehicle through a report. The law of Texas has laid down a mandate which makes it inevitable for a vehicle to be registered unless it has a clean title; this means that the vehicle is not charged with any lien or any other pending legal matter (Texas Transportation Code, Chapter 501).
Subsequently, the insurance issue was considered. As it was understood, the given vehicle is quite old and belongs to the category of classic cars, so to get insurance at a moderate price, it was rather difficult.
That is where we had to search for specific insurance products that can be obtained for classic cars. Such policies usually take into account characteristics of the car like its age, usage (it is mainly used in car shows, and occasional road use) and the cost of restoring the car.
Overcoming Insurance Challenges
Ourselves after careful searching was able to locate an insurer dealing in classic car insurance. The policy we got covered everything as agreed to in the initial contract and taking in to consideration the market value of the car as a classic car and not its depreciated value. This puts into consideration the classic car owners since they should be adequately compensated just in case of a loss through an appropriate type of policy.
The Manufacture Year of a Car and Insurance Price
Higher Premiums for Older Cars
Another issue which can be clearly seen when insuring older cars is the fact that with increasing age of the car increases, the insurance costs. This is due to the some increased probability of the breakage and more rates of the repair. Used cars are also more prone to be in an accident since older models may not have safety features such as airbags and anti-lock brakes.
Specialized Insurance Needs
When it comes to classics and antiques, the owners tend to look for insurance companies that specifically cater to cars of such nature due to the significance and the uncertainty that comes with the car’s worth. These companies have customized insurance packages that will require customers to assured a comprehensive cover with any make-over or repair done on the car.
Texas also stipulates minimum required liability in classic car insurance policies; however, the policies for saving classic cars are separate and much more flexible (Texas Insurance Code, Chapter 1952).
Legal Requirements and Considerations
There are certain legal provisions a classic car owner must adhere to if he or she resides in Texas. For instance, the state of the art law on Vehicle Safety Inspection, states that any vehicle, no matter its age, must be taken through a safety check annually; this becomes a herculean task for older cars (Texas Transportation Code, Chapter 548). Also, if one plans to use a classic car on the road, there will be other documents to fill along with some charges to be paid for car registration services.
Conclusion
As this work will later show, the insurance industry of used cars especially those bought from the online auctions is tricky. These include; determining the right value for the vehicle; being ready to pay high premiums and meeting the regulatory laws and requirements of a particular state among others. However, when the plan is well made with adequate legal advice, it is entirely possible to insure any car no matter how odd or antique the model.
Accordingly, the implication of several challenges and opportunities of purchasing used car through an online platform can be explained by the case of the 1970 Dodge Challenger stirred from the “Houston car auction”. However, one would note that applying for insurance may not be all that easy especially when the car is a classic one; but the power that comes with owning such a car is immeasurable.
That is why, acting as a lawyer, who does deal with such cases, I would advise potential consumers to investigate the issue, try to get a special insurance plan, and, of course, consult a legal expert on possible legal requirements. That way, you will get the full value of your used car without unnecessarily suffering stress and or extra expenses.
The insurance as well legal frameworks governing buying and selling of used cars in Texas can be a steep learning curve. However, all these challenges can be dealt with if the car to be dented is valuable and insured for a successful dumping.
Source: Autobid Master, TX
