Wheel Deal: Collector Car Insurance

Wheel Deal

To capitalize on opportunities in collector car insurance and the market as a whole, think specialization

When you’re in the business of insuring collector vehicles, you grow accustomed to dealing with exotic, high-end cars. Even so, it’s not everyday a customer asks for a quote on a legend like the 1967 L88 Corvette.

“That is a $3 million vehicle, a truly incredible car,” says Adam Boca, lifetime member of the National Corvette Museum (NCM) in Bowling Green, Kentucky, and an agent at the affiliated NCM Insurance Agency. The agency successfully wrote coverage for not just the L88, but for the vehicle owner’s entire collection, including a number of rare Chevelles, Camaros, racing Ferraris, and other classic automobiles.

Not every classic car is a multimillion- dollar machine, nor is every collection as extensive as the L88 owner’s. “We do have customers with $30 million or more of vehicles in their collection,” says Boca, “but we also have people looking to insure a car worth $10,000 that is priceless to them personally.”

While their taste in vehicles may vary, automobile collectors are united by a passion for classic cars. These are people who not only know their cars inside and out, they view them as extensions of themselves. So when it’s time to insure their vehicles, they often want an insurance partner who shares that mindset, who sees collector cars as something special, too.

“People don’t want to have to explain their collection to underwriters who don’t understand the market,” says Rick Drewry, collector car and motorcycle senior claims specialist with American Modern Insurance Group in Ohio.

“If someone has an accident with their LS6 Chevelle, they don’t want to talk to an adjuster who has never worked with a classic car. They want somebody who has experience and expertise,” Drewry adds. “We make a point to hire people who have been in the auto business at least 10 years — not just as enthusiasts, but working in the business so they truly understand the nature of classic cars and their owners.”

Looking Beyond Standard Markets

There’s a reason NCM works only with companies that are specialists in collector cars, says Boca. “Standard markets simply aren’t the best place to put collectible vehicles.” The difference starts with the coverage being offered. Most standard markets will provide a stated value endorsement on a classic car. However, those forms do not guarantee that the value shown will indeed be paid. That’s not the kind of surprise a policyholder wants sprung on them in the event of a loss.

“Stated value provides payment ‘up to’ the stated amount. It still gives the insurer the right to haggle over the value of a vehicle when a loss happens,” Drewry explains. “Agreed value sets the price at policy inception, which is important because policyholders don’t want to have to prove what their car is worth later.”

Collector policies can be custom tailored with a number of other coverages and features. Low mileage and multi-vehicle discounts reflect the fact that most classic vehicles are not used regularly; however, policies should be flexible enough to give policyholders the freedom to drive vehicles to and from work, on errands or for other personal use. Roadside assistance and trip interruption are important coverages for older vehicles that may be more prone to mechanical breakdown. And spare-parts coverage extends the reach of the vehicle policy to extra wheels and other components that collectors often own.

Claims Challenges

The claims process is where the proverbial rubber meets the road, and nowhere is that more true than in the classic car marketplace.

“You don’t want to find out how good your insurer is after you have had a claim,” Drewry says. “Talk to the company. Find out the type of repair networks and claim resources they have. Make sure they are willing to let policyholders pick out their own shops and work with people they know and trust.”

“We are here to protect the true value of the vehicle, which is often tied directly to the parts that are used,” says Boca. “Reproduction components decrease the value of a car even if the repair is functionally and cosmetically perfect. You need to work with a company that is willing to source original components to make the repair right.”

Take, for example, the recent case of an NCM customer with a glass breakage claim on a 1991 Corvette ZR-1. “That’s not just a simple replacement,” Boca explains. “There’s a very specific way that the glass was manufactured for the ZR-1, and you can’t find new windshields anywhere.” The repair required contacting ZR-1 owner groups until an original front window could be sourced.

Drewry has handled claims involving accidents and engine fires, stuck gas pedals that shot cars through the back of garages, and even a Shelby Cobra that ended upside down in the river. But his most challenging claim involved a 1959 Impala. “A tornado ripped a tar-and-gravel roof off the garage, dumping gravel over the entire car from front to back,” he recalls.

The problem was not just the thousands of chips and dimples that required fixing, but also the fact that the car had been hand-finished by famous custom car artist and hot-rod builder Troy Trepanier.

“The value of the car was completely tied to the paint job, so there was only one option for restoring it,” says Drewry. He contracted with Trepanier to repair the damage and recreate the original custom finish.

Both Boca and Drewry agree that, in general, the toughest cars to insure and repair are high-end foreign vehicles.

“To replace the front end on a Bugatti costs thousands and thousands of dollars,” Boca says.

“Ferraris, Lamborghinis, Bentleys, anything exotic is challenging to fix,” says Drewry. “It’s hard to find parts or even parts pricing. Many components are handmade, and the cars themselves aren’t designed with crumple zones and bolt-on parts like production vehicles, which increases the cost of repairs.”

Opportunity for Brokers

The price of, and demand for, collector cars tend to fluctuate with the economy. “The vehicle market is strong right now. It’s unbelievable to see cars sell at auction for the money they are getting today,” Boca says.

The surge in car value and buying activity points to a good opportunity for brokers and agents who can align with specialists in selling and servicing collector vehicle insurance.

“A lot of people still use their standard auto carrier to insure collector vehicles,” Drewry says. “Understanding and explaining the difference between standard and specialty markets will help brokers market to car buyers who are looking for someone to trust with their prized investment.”