Ill Winds (& Water) of Change: The collector car world and insurers rocked by hurricane season
Posted Date: 12/9/05
Though some three months have passed since the havoc of Hurricanes Katrina and Rita, the collector car world only now realizes the depth of financial—and emotional—damage.
The storms might also trigger a change in the way the collector car business writes insurance.
“I would estimate there were a couple of thousand collector cars lost in all,” said McKeel Hagerty of Hagerty Insurance, a company that specializes in writing policies for sports and collector cars, as well as for the recreational marine industry.
To date Hagerty has 419 Hurricane Katrina claims, with 75 percent as total losses. There are 275 claims in and around New Orleans, with an average value of $23,000—or $6.3 million. The top loss: a Ferrari 550 Maranello. “And we had some Bentley Continental GTs and a couple of Jaguars in the $75,000- to-$80,000 range,” Hagerty said.
Hurricanes Rita and Wilma “were peanuts” compared to Katrina; Hagerty has close to 100 claims for those two storms combined.
Hagerty is one of several companies that write collector car insurance. Of all cars on the road, some 570,000 are estimated to have been destroyed in the storms.
One customer’s collection of muscle cars, including nine vintage Corvettes, was lost. “That one was probably worth about $520,000 to the guy.”
These storms taught several lessons, Hagerty said. The most important: “Saltwater is really bad for cars. Last year we had four storms—three hurricanes and one tropical storm. People don’t think about water and what it does. It begins the corrosion process of precious metals almost immediately.”
Not all the damage is done by nature. Hagerty fears that while some wrecked cars will be too costly to restore (a collector can buy back a wreck from Hagerty; if not, the company parts out the undamaged pieces), well-intentioned legislators may expedite laws that will put vintage vehicles in jeopardy.
“There is no clearinghouse, no central location to find out about these cars and where they are,” Hagerty said. His concern is that in the rush to clean up the mess, extremely valuable or unique cars will be lost forever. “We have to be sure of what is—and what is not—going to the crusher.”
Added to those woes is the effect hurricanes will have on future insurance premiums. Collectors outside the affected area should not see premiums rise or have changes to their insurance requirements. That is not true for those living along the shoreline, Hagerty said.
“Without a doubt, these people who live within the Gulf regions will see a significant impact in their ability to buy insurance and the premiums.”
Hagerty adds he has used his company’s expertise in writing recreational marine insurance to guide him toward future collector car policy writing.
“[In marine insurance] we ask people to file an emergency contingency plan for if a storm hits. What are they going to do with their boat if a hurricane approaches? With large [car] collections, we ask them to create a plan for us in case of emergency, too.” These emergency plans might become mainstream practice. Hagerty will also recommend to “snowbird” collectors—those who winter in Florida and travel north for summer—that they move collections inland.
“We won’t deny them coverage, but we are trying to help people not lose their prize possessions,” he said.
Through it all, Hagerty says it’s not just about the cars, but about the people behind the cars. The stories have taken a toll on his employees who help to process the claims. He is doing what he can to keep them cheered.
“The sad stories we’ve been getting is that their lives have been destroyed, and that’s heartbreaking,” Hagerty said. “We had one guy who lost his home, who lost his job and everything he owns. He asked us to FedEx his check to the local FEMA office so he could start his life over.”http://www.autoweek.com/news.cms?newsId=103742