Rates in the classic car market are currently far more attractive than their counterparts in standard auto. But if you’re considering switching some of your standard auto clients over to the specialty market, you need to do your homework first—classic car insurance isn’t a market where you’ll be able to succeed by winging it.
“In many cases, these are items these clients have been collecting their entire lifetimes, or previous generations have passed them down,” says Ron Fiamma, global head of private collections, AIG’s Private Client Group. “They’re often irreplaceable. They’re rare. Sure, they’re valuable and expensive, but what’s more important is that clients are very emotionally involved with these objects.”
If you really want to prove your value as an independent agent, don’t overlook these four coverage issues that could be crucial in providing the best protection possible for your classic car clients:
1) Cherish and salvage. “If you have your father’s or grandfather’s car and it gets totaled in an accident, you may still want to keep that car,” points out Tim Tompkins, executive vice president of business development at Hagerty Insurance.
With a Cherish and Salvage endorsement, your client would have the option of not only receiving full guaranteed value for their vehicle after a loss, but also keeping the damaged car in order to restore it.
“There’s more to that car than just its intrinsic financial value,” Tompkins says. “We recognize there’s a very emotional attachment to that car, so we want you to keep it, rebuild it and get it back on the road so we can all enjoy it as well.”
2) Newly acquired autos. With the prevalence of auctions and online bidding, more classic cars are becoming available to a wider audience—which means your clients are more likely to have more than one.
“Clients need to know if they buy a car, whether it’s being shipped to them or they’re driving it home off the lot, that it’s covered automatically into their policy,” Fiamma says. “A Newly Acquired feature on their policy is crucial to make sure they have coverage.”
3) Off-site storage. For high net-worth clients with large classic car collections, at-home storage is usually out of the question. “Collector vehicles are often stored in warehouses that are 15-20 minutes away from where the person lives,” says Jeff Walker, senior collector vehicle insurance specialist at Chubb. “A lot of times those facilities are rented and in a commercially zoned-type space.”
Make sure any off-site storage facilities have adequate, standard protections in place. “If the storage facility is well loss controlled, we’re happy to have the client store their cars there,” Walker says. “In states like Florida, for example, if you’ve got somebody living on the inner coast or waterway but they’ve got a 10-car collection, we want it to be in a storage facility more inland.”
4) International coverage. High net-worth car collectors are also much more likely to have overseas exposure for their classic cars, whether they purchase a vehicle in Europe and need to get it back to the U.S., they’re attending a major event like this summer’s Mille Miglia in Italy, or they’re just planning a three-week vacation and want their car to tag along.
“Having international capability for the coverage is crucial for both physical damage and liability,” Fiamma says. “Make sure that car is covered everywhere in the world, including while it’s being shipped whether it’s by plane or by boat.”
Walker says international coverage for classic cars should address three main components: transportation, to cover the vehicle while it’s getting from the U.S. to an overseas location or vice versa; physical damage, to cover the vehicle while it’s on the ground somewhere else; and liability—what laws does that country have regarding liability insurance?
“People are having their classic car picked up at their home in New Jersey, then shipped on a trailer down to the docks in Newark, where it loads into a container, is strapped down and sent across the Atlantic—and that’s the slow way,” Walker says. “Folks are also containerizing their vehicles and putting them on an airplane. Most standard collector vehicle policies in the U.S. don’t specifically include or have language around those types of exposures.”
Jacquelyn Connelly is IA senior editor.
