Selling collectible vehicle insurance for fun and profit

There's a reason I have a distinct memory of the first collectible car policy I ever wrote. That's because I wrote it for myself. No one can accuse me of not practicing what I preach!

I've been in the insurance business for more than 20 years, but my involvement with classic cars goes back even farther. I shared an interest in antique automobiles with my grandfather, and the first car we rebuilt together was a 1968 Olds 442. Later, my own first car was a painstakingly restored 1967 Olds 442, and realizing it needed insuring beyond the typical auto coverage, I sold myself a policy when I entered the insurance industry in 1985.
Since then, my interest in collectible cars has only continued to grow, and so has my list of collectible car customers. Of my 900-plus clients, 10% of them have bought collectible car insurance. In turn, 90% of that number have gone on to purchase additional auto or homeowners policies from me. Today, more than 20% of my agency's $850,000 annual revenue is related to my collectible car customers.
I sometimes have the strange notion that this isn't “fair,” that I shouldn't be able to make money on something that's also a hobby. But isn't that everyone's dream? I get tremendous enjoyment out of classic cars, but you need not be a collector to profit from this business niche. In fact, in terms of ease of sales and service, and the continual opportunity for growth, I think collectible car insurance is about as good as it gets in our business. The policies almost sell themselves, and the client base represents precisely the sort of demographic we all spend our careers looking for.
In this article, I'll provide a little more detail on how I've ridden the ever-growing interest in collectible automobiles–and make no mistake, that interest is huge and nationwide–down the road to greater sales.
A Ford by any other name
When is an “antique” not a “classic”? In the auto industry. In this context, any car 25 years old is considered an antique. So, if for some reason you still have a 1976 Ford Pinto, you might be pleased to learn that it has attained the venerable status of “antique.” But to be considered a “classic” car, the vehicle must have collectible value. Unfortunately, while the Pinto might have great sentimental value for you, it's not likely to be shared by many others, so it's not a classic or a collectible.
When people think of “classic cars,” they usually think of something like a Model T or the 1930 Packards they've always seen in gangster movies. Yet many quite modern cars are classics, too, because a classic car for insurance purposes need only reach the ripe old age of 15 in some cases. And so Chevelles, Camaros, GTOs, and Mustangs can be as “classic” as the first Edsel to roll off the line, since they have collectible value. Age and condition don't necessarily qualify a vehicle; supply and demand, as determined by collectors, do.
Most important, however, a vehicle has to be almost completely intact (with original parts) and usually fully restored to meet the collectible standard. This is known as a “stock” car. Each carrier has its own definition of “intact,” but they're all fairly strict. Minor adjustments are usually allowable. For example, some companies make CD players that resemble the original factory-installed AM radio, and carriers normally won't object to such a small modification. But if you're looking to put in a sun roof–think twice.
Antique vehicles that have been altered in some substantial way can be insured with “modified” policies, which are kind of a middle ground between a standard collectible car policy and regular auto insurance. For example, a 1950 Chevy truck chopped up into a street rod (flame decals and all that) would be eligible for a modified policy. Where a typical collectible policy would have a zero deductible, the modifieds would include a deductible and require a higher rate.
In terms of premiums, collectible car policies are much, much cheaper than standard auto insurance. By way of illustration, recently I wrote a policy for a 2005 Jeep Liberty for a 60-year-old woman, and the premium was about $950. If that car got totaled before dinnertime, the National Automobile Dealers Association pricing guide would list its actual cash value at about $22,000. Meanwhile, I have $36,500 of agreed value coverage on my 1960 Corvette, for which I pay $212 a year. If I drive it into a telephone pole, I'm guaranteed to get $36,500–once I get out of the hospital.
There are other benefits to collectible policies as well. Some plans include an inflation protection feature that annually increases coverage by $500 to $600 to keep pace with the car's value. “Spare parts” coverage is also available. When I was restoring my Corvette, I drove to Carlisle, Pa., (where the biggest antique car shows in the East are held) with $8,000 in my pocket to buy parts. (And I did; I came back with $20!) If someone had broken into my trunk while I was having dinner on the way back and stolen $492 worth of bumpers, I would have been covered.
A collectible vehicle policy's coverage is the same as that in a standard auto policy: bodily injury, property damage, medical payments, uninsured or underinsured, comprehensive and collision, towing. You can do as much damage with a classic car as any other vehicle, so the coverage should be the same too. People usually just duplicate their standard auto plans, except for the comprehensive and collision, of course. Premiums almost always run between $120 and $250.
Policies have a number of restrictions, but they're generally not a problem since most collectible car owners are already complying with them. Usually, the cars can only be driven to car shows, in parades or for the occasional pleasure ride. Total driving cannot exceed 2,500 (or sometimes 5,000) miles per year. If the car is out, insurers want the owner with it. Cars can't be driven to and from work, to the mall, or to show off to a high school buddy two states away. Each driver in the household must have 10 years' driving experience, so if 17-year-old Johnny wants to the take the '57 T-Bird to the drive-in, that's not permitted by the policy. The car also must be kept in a locked garage. Carriers generally examine driving records a little more closely than they would for typical policies.
As might be expected, claims are rare. In over 20 years of writing this type of insurance, I still have more fingers than claims. Not only do the policies sell themselves but they service themselves too.
Filling out the app is easy. You gather all the typical information you would for a standard auto policy. Photos need to be submitted. I photograph all four sides of the car, the engine, the trunk and the interior. Then comes what I call the fun part: determining the car's value. Collectible auto policies are all stated value rather than ACV, as with regular cars, so an agreement must be reached.
Since I have a background in this, I can usually make an educated guess of the car's value, but I frequently bring along a little helper to make sure. There's a publication called Old Car Price Guide that comes out every three months. It's similar to a NADA price guide, but it covers antique and muscle cars only. Cars are rated on a 1-to-6 scale, with “1″ representing what are called “trailer queens”–cars that are never driven, and are often in better condition than when they left the factory–and “6″ representing cars still needing a fair amount of restoration.
Here's how a valuation might work. A client calls about a 1940 deluxe two-door convertible Ford, and he wants $45,000 of insurance on it. He thinks, as we all seem to do about our cars, that it's a “1″ by the book. In my experience, there are probably no “1's” in my entire four-county area, so I'll definitely bring along the “bible” on this site visit. There, according to the published criteria, I can show him what he actually has is a “2″ and that a 1940 Ford in “2″ condition is worth $38,100. There's often some haggling involved, but ultimately the client and I almost always reach an agreement.
I always personally view and photograph the cars, mainly to save the trouble of submitting apps that I know will be rejected. For example, recently a gentleman called wanting $59,000 coverage on his 1957 Chevy, allegedly in mint condition. When I looked at it and opened the trunk, I found three holes I could stick my fist through.
Clients also need to understand that value is determined by the market, and not by the amount of work or money invested in a vehicle. I had one client with a 1966 Mustang who had $57,000 of work done on it, and so he understandably wanted the policy to reflect that expense. I had to explain, however, that 1966 Mustangs simply aren't worth $57,000, and so insurance could not be written for that amount. After all, I could take a 1982 Chevette and pour $30,000 into it, but that doesn't mean I've actually added any value to the car.
This is a difficult thing to discover, but occasionally you'll come across “clone” cars. Right now there are more SS Camaros and Chevelles out there than Chevy ever made. Someone will take a plain-Jane Camaro and “restore” it by attaching SS emblems and maybe adding a 396 engine, because big-block cars are worth more than small-block cars. The changes can be detected, but you have to know what to look for. On one such vehicle, for example, I was able to spot where the old shifter used to be on the steering column. To be on the safe side, researching the vehicle indentification number is recommended, since clone cars cannot be insured as originals.
To market, to market
Here's my entire marketing plan for this niche in exhaustive detail: going to car shows and shaking hands. Many classic car owners, particularly those fairly new to the hobby, either have inadequate insurance or aren't aware of all the options. When I introduce myself, I'm almost always immediately asked for a business card. Owners are eager to talk to me. It's that easy. The coverage is inexpensive, uncomplicated and it's clearly necessary; thus a sale really comes down to common sense.
As a “car guy” myself I have a degree of credibility that other agents may not possess, but you'll find that collectible car insurance is extremely fertile ground regardless of your background. Now, if I lived in a larger metropolitan area–I cover four counties around Morgantown, W.Va., and we're not exactly waist-deep in classic automobiles–I might market more aggressively. The potential clients are quite ready to be sold. If it were always this easy, we'd all be rich!
I normally attend 15 or 20 car shows a year. If an owner isn't near his car when I come by, I just slip a brochure on the front seat if the window is down, and then I usually get a call within a day or two. Now that the weather is warm, I probably get four or five car calls a week. I frequently get calls from downstate (Charleston, for example), and refer them directly to a carrier or tell them to contact an independent agent in their area. Since I prefer to view the vehicles in person, it's impractical for me to try to do business all over the state.
As a collector myself, I get a kick out of the stories behind some of the cars I cover. The most expensive car that I can recall insuring is a 1969 Charger RT Hemi-Car, with 21,000 miles. The man who bought it new still has it today, and it's insured for $88,000–and that's probably underinsured a bit.
Another of my clients has a DeSoto collection, one of which–a pink one-had been owned by Bruce Willis. I was there when it was delivered. As the truck left, the new owner noticed–because I told him–that the 14k gold-plated hubcabs (standard on this particular model) were not on the vehicle. I've never seen a 60-year-old man run so fast! When he caught up with the truck, he was informed that the hubcabs were wrapped in plastic in the car's trunk.
The pink Cadillac that inspired Aretha Franklin's “Freeway of Love” is owned by one of my clients. Another Cadillac owned by a client, although subsequently sold upon his death, was originally owned by actress Butterfly McQueen. She purchased it as her first car, so the story went, with her earnings from “Gone With the Wind.”
Accessorizing and upgrading
After working for an agency for 12 years, I started my own from scratch in 1997. My wife thought I was crazy, and with two kids and a mortgage, I probably was. I figured that if I had nothing else, however, I would have the car people, and they would be my base for growing my business. American Collectors, a program administrator that specializes in this type of coverage, was one of the markets I had used, and they played a big part in getting me up and running. I knew how easy writing insurance for collectible cars was, and figured that one thing would lead to another.
And indeed it did. I enjoy selling collectible vehicle insurance for its own sake, of course, but here's the real reason for seeking out this type of business: referrals and cross-selling. This niche can open some doors for you. The typical classic car owner is mature, financially secure and often a business owner. His hobby suggests a meticulous, careful personality. Collectible car insurance by itself is not going to get you a summer home on the Riviera, but it's an excellent springboard to selling policies that might. In addition to referring you to other classic car owners–and we all seemingly know one another–your clients may also refer you to other mature, financially secure prospects.
Providing collectible vehicle insurance is a good service for my customers. If I've had someone's auto and homeowners insurance for 15 years and he buys an antique car, I don't want to tell him, “Sorry, you need to go see another agent.” I'm a firm believer in face-to-face service, and if a client needs something, I want to be the guy who handles it.
As a client, collector and insurance agent, I'm on all sides of this business. It's been fun for me, and it's been profitable. It could be for you, too. Specializing in the collectible car niche can truly be a ticket to ride. Chris Boyles founded Heritage Agency in 1997 and has 22 years' experience as an agent and broker. Heritage provides personal and commercial-lines insurance in the Morgantown, W.Va. area, with a specialty in classic cars.