One of the realities of owing an older car is having it appraised. The main reason for getting an appraisal is that the insurance company requires it, sometimes even for winter beaters. Luckily for many car club members, they have their own in-house appraisers that are recognized by insurance companies and these appraisers are approved by insurance companies and the Ministry of Transport for accurately assessing the value of vehicles. Sometimes, car clubs will include a 1 year membership with their appraisals and members get discounted rate for appraisals.
Although many insurance companies no longer require an appraisal to obtain collector car insurance, it is still a good idea to have your vehicle appraised periodically. This will ensure that you know your vehicle's value so that it does not become under-insured over the years.
Nowadays, the License Bureau also requires an appraisal for private sales to ensure that the Province gets the maximum sales tax. In the past, many people bought a car with cash and wrote a minimal amount like $100 on the bill of sale so that the buyer would only have to pay nominal sales tax on the transaction. The Province recognized this was happening and now requires an appraisal so that this sort of misrepresentation does not take place. The sales tax payable to the Province is the greater of the purchase price or the wholesale value. The wholesale value is based on the Canadian Red Book, which lists the wholesale and retail values of used vehicles.
For passenger and light commercial vehicles (2,200 kilograms and under empty weight) 20 years or older, the retail sales tax is payable on the purchase price, replacement value for insurance purposes, or appraised value, whichever is more. If you paid less than the Canadian Red Book value, you can get the vehicle appraised before changing ownership. If the appraisal supports a lower price then the Canadian Red Book, you pay the tax based on the higher value.
For older vehicles, especially those with more than the minimum liability insurance, it is wise to have an up-to-date appraisal. Correctly insuring your car's value for its market value will ensure that you will be able to get it properly repaired in case it becomes damaged or to reasonably compensate you if it is stolen or written-off. While it might seem to be a good idea to insure it for maximum amount possible (i.e., higher than its market value), this is a gamble on your part that such a loss will happen. If it does not, this over-insurance will cost you unnecessary premiums. For older, collectible vehicles, it is best to have them insured with a company that specializes in these types of vehicles.
Many people have winter cars that are essentially disposable. They are only insured for liability (no collision, no fire & theft, no comprehensive, etc) and if they're damaged, it's cheaper to scrap them and get another. Even though the appraisal will cost more than the market value (scrap value?) of the vehicle, the insurance companies still require an appraisal. Since there can be some leeway in the value of a vehicle, it is best to try to keep it in a reasonable, middle range. Having too low a value might cause the insurance company to question whether you are driving a safe vehicle.
Remember, photos need to accompany every appraisal. You need to make your vehicle as photogenic as possible for this purpose. The photos help to confirm the appraiser's report and will help the insurance company to know to what condition they will need return the vehicle in case of damage. Generally, 4 or more photos are taken to show the condition of the interior, quarter views of the car to show body condition from all sides, and photo of the engine compartment to verify type of motor. The appraiser should verify the value by comparing your vehicle to recent sales at auction of old cars, and should place a level of quality on your vehicle:
- Condition 1 - concours level
- Condition 2 - older high quality restoration
- Condition 3 - good quality driver
- etc ...
To prepare for an appraisal, ask your appraiser for advice. This will likely consist of the following:
- Clean the vehicle's exterior. Wash the engine compartment and underside as well.
- Clean the vehicle's interior. Remove all unnecessary detritus.
- Clean the vehicle's trunk. Remove all unnecessary junk.