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Save Your Clients Money by Switching to the Classic Car Market

Even if you don’t know it, you probably have more than a few classic cars hiding somewhere in your standard personal lines book—and it might be time to shop them around.
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Chasing Classic Cars, My Classic Car, Wheeler Dealers, American Hot Rod, Lost in Transmission—that’s just a small sampling of the long and growing list of TV shows that target classic car enthusiasts.

And entertainment is just one piece of evidence that the classic car hobby continues to gain serious traction around the U.S. As baby boomers turn their investment attention to passion pursuits like collector autos, they’re trading in memberships at country and golf clubs in favor of classic car clubs where they can drive their favorites on private racetracks.

“The hobby is in overdrive—no pun intended,” says Ron Fiamma, global head of private collections, AIG’s Private Client Group. “The country’s obsessed with cars to begin with, but over the past several years, the collector car space has really boomed.”

That means even if you don’t know it, you probably have more than a few classic cars hiding somewhere in your standard personal lines book—and it might be time to shop them around.

Why? “With the specialty market, you won’t see much change in rates,” says Tim Tompkins, executive vice president of business development at Hagerty Insurance. “You might see that this state’s a little higher than that state, or this urban area over the other, but I don’t think you’ll see any dramatic increases in the classic car market.”

“Normal market forces will always be in effect, but rates seem fairly stable,” Fiamma agrees. “A client can expect to pay rates that are in line with their loss history and the way their collections are protected. The better clients protect their cars, the more favorable their rates are going to be.”

That’s a stark contrast to the standard auto market, which “is suffering from an increase in severity and frequency,” Tompkins says. “Standard cars are being driven more because they’re easier to drive and there are more people out there driving them. That’s not necessarily the case with classic cars—there might be more people in the hobby, but they’re still driving on an occasional basis only.”

And in terms of increasing severity in the standard market, “that’s driven a lot by increased labor rates due to electronics and onboard computers—those cars are more expensive to fix,” Tompkins adds. “But we’re already there in classic cars—we have artisans and we have very specialized storage for the cars, so we’re used to higher labor rates.”

Most standard-market auto insurers had a rough first quarter, which means many of your auto clients may be unhappy about experiencing some unexpected rate increases. Why not “mine your book,” Tompkins suggests, for clients whose vehicles are currently insured in the standard market, but may actually qualify for a classic car policy?

If you insure any higher-end collectors with large fleets of classic cars, they probably already have insurance through the classic car insurance market. But that may not be the case for smaller car collectors that have one or two classic vehicles and never thought to tell you about them.

“Those customers are looking for quick turnaround,” says Jeff Walker, senior collector vehicle insurance specialist at Chubb. “They’re looking for clarity in what they’re buying, they’re looking for speed and they’re looking for a reasonably knowledgeable person to talk to about what they’ve got.”

In the past, many insurers would only consider a car “classic” if it was at least 25-30 years old. But now, the age of the vehicle matters less than how your client uses it. “If you’re a Mustang gal and you have a 1966 Mustang and a 2016 Mustang, of course we’ll take the 2016 Mustang also, because you’ll treat that like a classic car,” Tompkins explains. “You’re not going to drive it to the office every day and to the mall on weekends.”

That perspective is especially relevant during a time when many manufacturers are building brand-new collectible cars, such as the latest Dodge Demon, which will be the fastest street-legal production car in history. “We love those cars,” Tompkins says. “We don’t love a ’66 Mustang if you drive it to work every day.”

As an agent, “get inside that client’s head and look at what their usage is like—how they’re treating that car,” advises Tompkins, who notes that Hagerty has observed a recent uptick in SUVs and trucks moving over to the classic car market. “If it’s their fun-to-drive car, we’re going to look at it.”

Bonus: Switching your client from the standard auto market to a classic car policy will do more than secure lower rates for them. By showing that you understand and appreciate their passion for classic cars, you’ll also gain their trust—and increase your cross-sell opportunities. Fiamma works with one independent agent whose motto is “I go through a client’s garage to get to their house.”

“He gets to know clients through their collector auto collection—understanding the collection, appreciating it and insuring it,” Fiamma says. “Eventually, he rounds out the full account by getting the home, the daily driver autos and everything else.”

“The clients that collect those cars tend to be a better risk,” Tompkins adds. “They’re very careful about their car, and if they’re careful about that, they tend to be careful about everything else—homeowners, standard auto, anything else they collect. If you rethink the way you define a ‘collector car,’ you can bring them good news.”

Don’t miss next week’s Markets Pulse e-newsletter for four classic car coverage developments to watch in 2017. And don’t forget—as a Big “I” member, you have access to multiple classic car coverage solutions through Big “I” Markets.

Jacquelyn Connelly is IA senior editor.