An insurance company wants you to pay about five times less for your car insurance. Is there a catch? Of course. Your car must be a "collectible."
Collectible is a vague term, seeming to mean someone wants to collect it. More precisely, the vehicle is probably at least 20 years old and enjoying a slight rise in value. But some special new cars, such as the Dodge Viper, Plymouth Prowler and Ferraris, are also collectibles and eligible for the break from Hagerty Classic Insurance.
Simply put, to qualify, the vehicle just has to be special and not your daily driver. Hagerty Classic Insurance of Traverse City Mich., is a small family business, but is nonetheless the world's largest specialist in insuring classics, both cars and boats. In 1983 Frank and Louise Hagerty decided to convert their 30-year-old general insurance business into something unique: They began insuring only classic wooden boats. Since owners of such fine old boats are often devoted to an era, and own fine old cars as well, the Hagertys' specialty expanded.
Business is booming
Their son, McKeel Hagerty, as president of the company, is overseeing continued growth. And, why not? With the very passage of time, more cars become collectibles, and as the supply increases, so does the demand. The hobby of car collecting is booming.
"There's a lot of new money it in," McKeel said, recently. Some 600 car auctions are held yearly, and every buyer is a potential insurer.
But people don't have to be conscious collectors to qualify for a break in their insurance. You might have an eligible car and not know it. And it's worth knowing about.
The insurance for a 1965 Mustang convertible, for instance, might cost as little as $90 to $95, annually. "People are shocked when they hear our rates," McKeel said. "They ask us, 'Where's the catch?'"
Actually, the deal even has several built-in bonuses. Drawing on its marine heritage, Hagerty Classic Insurance writes for cars what are called "Agreed Value" policies, a sort typical of marine insurance. Losses are paid in full: no depreciation, no deductible and no adjustments. "Only Agreed Value insurance absolutely guarantees you will get all of your money back in the event of a total loss," McKeel said.
Appreciating the appreciation
Standard car insurance assumes a car depreciates with age, although with collectibles the opposite is more often true. The usual automobile policy is called Actual Cash Value and pays the depreciated "book" value. Some specialty companies write Stated Value policies, which meet the needs of collectors better than ACV policies because cars can be valued at greater than book. Still, payment is only "up to" the stated amount. "The actual payment can be less," McKeel said. "There's a reason they call them insurance 'adjusters.'"
So how can Hagerty charge less and offer more? Well, the classic niche is a classy one. Owners of collectible vehicles drive their cars both rarely and carefully, and they tend them like hothouse plants. An analogy the company uses: Writing insurance for collectibles is like writing health insurance only for those who are young and fit.
State laws differ. Some states do not allow some of the features of Hagerty's policies. For instance, the single liability charge. Whether the collection comprises one treasured jewel or a warehouseful, one charge covers all cars. And no need to call for a binder or to reactivate a policy after the winter doldrums. Insured is insured.
Some companies severely restrict the use of an insured collectible, limiting it to, say, 2,500 miles year. Hagerty is more liberal, understanding the dynamics of the growing number of vintage car tours, such as the California Mille and the Colorado Grand - each 1,000 miles in length. "Collectors generally use their cars infrequently and for pleasure," McKeel said. That’s the profile of a Hagerty insurer. Evidence is required of a regular car that takes the brunt of everydayness.
Rods, bikes and more
Old cars and modern rarities are not the only vehicles Hagerty covers. It insures classic motorcycle collections, vintage trucks, '50s muscle cars, and some high-quality replicas. Street rods, burgeoning in popularity, also can be covered. "We make no aesthetic judgments," McKeel said. "Just judgments of value based on the market."
Insurers with Hagerty include a collector of AMC Pacers. Subaru Brats are beginning to move the collector scale. And, yes, even Yugos.
To find out if that car or truck in your garage is eligible for an insurance break, call Hagerty Classic Insurance (800) 922-4050.