Earlier this year, comedian Jerry Seinfeld was sued for allegedly negligently misrepresenting the authenticity of a 1958 Porsche 356 Speedster.
As one of the world’s highest-profile classic car collectors, Seinfeld is widely known for his fleet of vintage and collectible Porsches—a significant portion of which he consigned to a Gooding & Company auction at Amelia Island back in 2016.
The buyer of the Porsche in question from that sale, Fica Frio Limited, is now demanding not only a full refund of the $1.54-million sale price, but also additional damages.
The feud has been making headlines in every industry—and unfortunately, this type of conflict is not uncommon. “It happens more often than you think,” says Rick Drewry, senior claims specialist, Collector Vehicle & Motorcycle, at American Modern Insurance Group. “Some people have been defrauded for decades and didn’t know it.”
The Real Deal?
Seinfeld’s lawsuit may be an extreme example, but “it doesn’t have to be a $1-million car,” Drewry points out. “A 1969 Camaro Z28, for example—if that’s a true numbers-matching car, it could be worth $100,000. But if it’s a fake, you’re talking about $30,000. That’s a significant difference.”
Drewry recounts one real-life example in which a 1969 Camaro Z28 was in a small wreck. “They took the fenders off, and there are hidden serial numbers and partial VINs throughout these older cars. We found out that the firewall number did not match,” he says. “This car was probably in a wreck at some point and then was repaired and made into a clone. The owners were heartbroken.”
How can you help your collector clients avoid investing serious money on a fake? Drewry outlines several tips for them to keep in mind:
- Check the facts. “If you’re purchasing a car and it’s supposed to be something special, consider checking with one of the registries out there that keep track of VIN numbers, data plates, serial numbers and past ownership,” Drewry says, citing examples like the Pontiac Historical Society, the National Corvette Restorers Society and the Shelby Unified Registry. “They go to the nth degree to make sure what you’ve purchased is authentic.”
- Ask an expert. “Get an expert to come out and look at the car, and always get a second opinion,” Drewry suggests. “If it seems like it’s too good to be true, it’s probably too good to be true.”
- Don’t be impulsive. “One of the biggest mistakes I see people make is to buy a car on a whim,” Drewry says. “They think, ‘Oh, I’ve always liked the 1967 Corvette—here’s a great opportunity,’ and they buy it that day. They don’t realize until sometimes years later they just got completely taken advantage of. People get excited, and then they pay for it later.”
Going through the process of validating a car’s authenticity is a smart practice anyway, because if your client ever sells their vehicle in the future, “that documentation adds value,” Drewry points out. “If you have two cars side by side that are absolutely identical, the one that has the most documentation is worth more. That’s a fact.”
According to Brook McGuire, strategy lead for specialty products at Safeco, an authentic classic car’s value depends on several key factors, including the condition of the vehicle, its mileage, and whether the equipment is original. “Taking the car cruising probably isn’t going to impact the value much, unless it’s a vehicle that’s got low original miles or if it’s a numbers-matching car,” she explains. In that case, “you could really diminish the value by adding miles.”
Drewry notes that values are on the upswing for resto mods and pro touring cars featuring high-quality, modern-day performance equipment. Consider a 1957 Chevy: “If you put an LS7 Corvette drivetrain in it, a six-speed transmission with controlled suspension, all after-market tubular control arms—that’s going to bring value,” he explains. “The same is true for the interior. Adding high-end custom leather upholstery, a customized dash and console—a lot of people are looking at the quality and the craftsmanship as well as the parts to determine what a car is worth.”
But expect to really do your homework if you want to understand how modified cars go up and down in value, Drewry warns: “All-original cars are a lot easier to document and follow—you’re basically judging a car on the quality and the originality, and then how it fits into the marketplace. With the modifieds, you’ve got to be involved in the hobby to understand why something’s worth a certain amount of money.”
The car is only worth what somebody’s willing to pay for it,” Drewry adds. “You can get into a ballpark of what its value should be, but there is no hardcore number for older cars or even custom cars. You’re following the market like you do the stock market—it goes up and down like a yoyo.”
“You see swings every few years depending on what’s in vogue,” McGuire agrees—which is why she encourages agents to discuss their clients’ classic car or collection at least every year or at renewal.
If the value goes down, “the question for the customer is whether they want to decrease the agreed value and save on their premium,” McGuire explains. “For the vast majority of collector car customers, the answer to that is going to be no. The value will likely rebound, so they’re not going to want to decrease the agreed value to save a couple of bucks.”
On the other hand, if the valuation has gone up, McGuire recommends that agents “adjust the coverage up, and potentially add a little bit of padding for what could happen over the next year before the next review.”
Jacquelyn Connelly is IA senior editor.