From the February 27, 2012 issue of National Underwriter Property & Casualty • Subscribe!

Good Investment Vehicles

While an unabashed love of classic cars is what really drives collectors to spend millions or even tens of millions on the hobby, the purchases—in addition to providing ego boosts and adrenaline rushes—often prove to be good investments as well.

Indeed, given the low returns on more traditional investment plays, some underwriters report collector cars are becoming even more popular these days as buyers view them as a way to park money in a relatively safe investment—while also getting a lot more enjoyment than what a stock or bond provides.

“We’re the largest underwriter of fine-art collections in the U.S., and one of the trends we’ve seen is that when the parents pass, the children are liquidating the art collections and redirecting [the dollars] to other collectibles,  such as classic cars,” says Ron Fiamma, vice president and director of private collections for the Private Client Group division of Chartis.

Adds Donald Soss, a vice president in Fireman’s Fund’s Private Wealth group: “Wealthy people want to put their money in stable assets, and we’re not seeing a lot of devaluation in these cars, especially if they are not driven. It’s a hot market right now—not least because the HAGI (Historic Automobile Group International) classic-car indices have outperformed the S&P 500 for the last six years.”

Recent auction numbers demonstrate the growth: In January at the Barrett-Jackson auction in Scottsdale, Ariz., one of the hobby’s biggest buying events, the company generated more than $92 million in gross sales—a 32 percent increase over 2011.

European sports cars from the 1950s and ’60s are still seen as the gold standard among investors; interest in American muscle cars from the ’60s—which had been soaring in recent years—has flattened out.

Buying trends agents and insurers should be alert to: Pickup trucks from the 1950s and ’60s are starting to garner more attention, especially from entry-level buyers, notes McKeel Hagerty, CEO of Hagerty Insurance. “We’re also seeing increasing interest in early Japanese collector cars and British bikes like Triumphs and Nortons.

“We do espouse that cars are a good investment; if you can afford to buy a Mercedes Gullwing, it’s pretty much guaranteed you’re not going to lose money,” adds Hagerty. “But I don’t know too many people who collect who say they do it for the valuations; it’s about the passion and fun.”

Comments

Resource Center

View All »

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

Get The Most From Your Book Of Business

Turn your existing book into an exclusive program or roll your book. Learn about the...

Who Pays When There’s a Pollution Claim on an Auto...

The Pollution Liability - Broadened Coverage of Covered Auto (CA 99 48 03 06) endorsement...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.