Filed Under:Agent Broker, Coverage Issues

Q&A: John Spritzky of American Modern on Insuring Collector Cars

Summer weather means more collector cars on the street strutting their stuff. Learn how to protect these valuable toys.

The classic car market is booming, spurred by baby boomers indulging themselves by buying the hot muscle cars or other collectibles they could only dream of as teenagers. According to Car and Driver, 58% of the roughly 5 million collector cars in the U.S. are owned by boomers.

Summer months mean more collector cars are out on the streets strutting their stuff--at car shows, drive-ins, and just catching the breeze. Although what makes a classic car a "collectible" is extremely subjective, some of the most popular American models are the 1971 Plymouth Hemi Barracuda Convertible; 1967 Shelby Mustang GT350; 1969 Pontiac GTO Judge; 1970 Chevrolet Chevelle LS6; and 1963 Chevrolet Corvette Split Window, according to American Modern Insurance Group.

These classic autos need special protection, and smart agents and brokers can tap into a lucrative market by specializing in this coverage. We spoke with John Spritzky, vice president, product management of American Modern Insurance Group, which specializes in insuring collector cars, about what makes this niche unique. Read on to see his comments--and for some beautiful automotive eye candy!

corvette

1963 Chevrolet Corvette Split Window (photo: Mecum Auctions)

Q: What are some of the unique exposures to insuring collector cars?

Making sure the vehicle has the proper amount of insurance or valuation is critical. There are numerous attributes that can affect a vehicle’s value including age, condition, modifications and accessories. Agents really want to be thorough in considering the impact of these factors. 

Agents should explain the importance of selecting a carrier that has “agreed value” coverage to eliminate valuation issues during a loss. For agreed value, the insurance company will work with you and your customer to determine how much the vehicle is worth and insure it for that guaranteed amount, regardless of market fluctuations. 

Many car owners restore collectible cars. Cars under restoration may not be covered by some policies, so it’s important for agents to check with their customers on whether they will be restoring the car in some capacity. 

Since these vehicles are typically not for everyday use, make sure your customers select appropriate mileage plans to ensure proper coverage. The amount of miles driven annually can have an impact on the insurance premium, so selecting the right amount is very important. 

Also make sure the policy has good towing and trip interruption coverage is also an integral component. Given their age, these vehicles are often susceptible to breaking down, so towing is a valuable and important coverage to have. Additionally, having guaranteed flat-bed towing is ideal for collector cars.

mustang

1967 Shelby Mustang GT350

Q: What are some other unique exposures?

Collector vehicles are susceptible to theft, vandalism, and damage from adverse weather conditions.  For that reason, many insurers require the unit(s) to be stored in a permanent, solidly constructed, structure with proper locking mechanisms. Due to this requirement, it allows collector car insurers to offer affordable rates (premiums) at a greatly reduced discount to standard auto.

Avid collectors usually have spare parts, accessories, and tools used for emergency maintenance. These extras may not be covered by a homeowners' policy. Make sure your client has coverage for these types of parts on their policy.

Generally, collector car insurers exclude coverage for commercial and business usage--including if the owner is receiving any financial benefit from use of the collector vehicle. However, customers are frequenting car shows and auctions with their vehicles. It’s not out of the question that they may be approached to be sponsored to attend these shows / events. Some insurers will allow some financial benefit to be received because of this type of sponsorship.  

Another unique exposure is modifications on collector cars from their original manufactured state, which is particularly common on street rods and other muscle cars. Acceptable modifications for many insurers include: non- factory supercharger / blower / turbo, nitrous, roll cage, wheelie bars and/or parachute, modified to over 500 horsepower, paint / body modifications and custom fabricated interior. These modifications are indicators of an increase in the cost of repairs, frequency of loss, and increased performance.

Judge

1969 Pontiac GTO Judge

Q: What can agents do to expand their business in this area?

There are many opportunities for agents to expand their portfolios to include collector cars. Enthusiasts frequent car shows and auctions such as Concours d'Elegance (Amelia Island, Fla. and Pebble Beach, Calif.); Autorama in Detroit; and Barrett-Jackson’s Collector Car Auction in Scottsdale, Ariz. These venues provide an excellent opportunity to meet and network with the people who make this hobby such a national pastime.

Agents can buy sponsorships and booths to solicit those potential policyholders. In addition, there are numerous car clubs throughout the country, such as the Antique Automobile Club of America, the Classic Car Club of America, Goodguys Rod & Custom Assn., or the Mustang Club of America that provide great access to groups of like-minded car owners. You can search on websites like Hemmings Motor News to search for a club near you or by a specific make/model. Going to a car club meeting and presenting on the importance of proper insurance could open doors to more than one new customer. 

In addition, there are numerous car clubs throughout the country that provide great access to groups of like-minded car owners. Going to a car club meeting and presenting on the importance of proper insurance could open doors to more than one new customer. 

Agents should evaluate their current book of business. Do you know how many of your customers own cars that are eligible for a specialty collector vehicle policy? It’s probably more than you expected. Rounding out the account for those policyholders makes that agent more valuable to their client.

There are many publications that focus on the collector car enthusiast, like Old Cars Weekly or Hemmings Motor News, for example.  Advertising in these publications can establish an agent as a specialist in dealing with these unique risks. There are many competitors, so the more visible you are in the hobby, the better position you will be to get new business.

chevelle

1970 Chevrolet Chevelle LS6 (photo: Mecum Auctions)

Q: What tips would you give agents and brokers who want to educate themselves on the collector car insurance area?

Some of the best resources are car owners themselves. Agents can use the car shows and auctions as a forum to really learn specifics about the marketplace. Owners and event facilitators enjoy sharing stories about their cars. This is a great opportunity to learn the different classes of antique, exotic and classic from an insurance perspective as well. 

Other resources are magazines, blogs, clubs and shows that contain a wealth of information about hot topics and trends within the industry. 

Lastly, agents should talk to their carriers about coverage features and benefits, exposures and underwriting criteria and guidelines.

Cuda

1971 Plymouth Hemi Barracuda Convertible (photo: Mecum Auctions)

Q: How can agents take advantage of the spring/summer collector car buying season for growing their collector car insurance business?

This is the time of year when many local car events begin. Getting out in front of eager owners at car club events, car shows and car auctions can help build your visibility quickly. It’s all about timing and catching these potential customers when their renewal date is on the horizon.

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