As new collector enthusiasts from Generation X and the millennial generation enter the market, agents have a great opportunity to work with an emerging segment.
The classic car market is considered steady in the sense that premiums are expected to remain stable for the remainder of the year, yet the valuations of certain older model classics are declining as baby boomers start to sell off their cars and leave the market.
As new collector enthusiasts from Generation X and the millennial generation enter the market, it is important to ensure these new collectors understand and are purchasing the correct coverage for their new hobby.
Agents have a great opportunity to work with an emerging segment. Here are four ways to correctly insure the modern classic car collector:
1) Agreed value. “Collector car coverage is different than standard auto coverage," says Rick Drewry, senior specialist, claims, learning & development at American Modern. “A collector car policy should offer agreed value coverage, which means that the value of the vehicle is determined at the time that the policy is issued."
Brook McGuire, strategy lead for specialty products at Safeco, also supports the agreed value coverage. “If you've got a car where the vehicle value is in flux, five years ago that classic car may have been worth $40,000 but today it's only worth $28,000. If it gets destroyed an insurer is going to pay out the agreed value of $40,000 minus the deductible. It protects the value of the vehicle."
“Most clients think they are all set with 'stated amount' as an endorsement to their policy, but 'agreed value' is the way to go," concurs Steven Mollohan, president of Georgetown Insurance Agency, Inc. “I would recommend every agent go into their book of business and review this—it is continually misstated."
2) Underwriting changes. “The key with these cars is to underwrite them well and make sure that the cars live the lifestyle of a collector car," Drewry says. But while the traditional classic car policy may require the car to be garage-kept and only used occasionally, underwriting considerations for collectors that want to use the car on the open road must be different.
“Millennial collectors are a lot more pragmatic and less likely to splurge on something like a luxury that's just going to sit in the garage," McGuire says. “They're much more likely to want to drive their cars regularly."
Agents need to be cognizant of what the new collector is looking for. There are a lot of newer cars out there— like Mazda Miatas, Mustangs, Corvettes and Camaros—that fit the collector car insurance program, but most insureds do not know that collector car insurance is an option.
“It's not just about antique or collector vehicles anymore that are 25 years or older, it's about any enthusiast's vehicle or anytime-to-drive vehicle. I think there's a ton of opportunity here," says Barbara LeMieux, vice president of underwriting, Hagerty.
3) Policy review. It is important for classic cars to have thorough, well-preserved service records and for the cars to be well-maintained. “It's also important that car owners regularly review their coverage amounts. Some collectors may not have reviewed the value in several years, and current coverage amounts may be inadequate," says Paul Morrissette, senior vice president, Chubb. “For those who adjust values annually, there may be an opportunity for insurance savings, given the conditions in some market segments over the past year."
“Agents and brokers should consider contacting their clients to inquire about the welfare of the cars and encourage them to get out and enjoy a drive. These conversations can also lead to a discussion about whether coverage adjustments are needed," Morrissette adds.
4) Understand who you are covering. “Agents will want to be mindful of international coverage as many U.S. collectors purchase vehicles overseas at private sales and auctions and want to bring them home. Also, many U.S. collectors will transport their vehicles overseas for European tourism and rallies," says Jack Butcher, senior vice president of North American Markets, Hagerty.
"Driving classic cars not only brings enjoyment to the owner, it is also a source of pride and joy," Butcher says. “My advice to any agent is to first understand your enthusiastic clients, because once you understand that, you'll understand a very special passion that needs to be catered to and protected beyond just the asset value."
Olivia Overman is IA content editor.