Collectible Cars: Three Core C
“Incredibly reasonable” premiums for agreed-value policies are made possible by
BY BRYANT ROUSSEAU
HOW ARE Classic & Collectible Car policies different from Standard Auto plans? Three key characteristics make this line of insurance unique.
1 LOW PREMIUMS
The premiums for Classic & Collectible Car
coverage are much cheaper than Standard
Auto policies, with most insureds paying
just 25-33 percent of what they would for a
comparable policy on a daily-drive vehicle.
Rates are “incredibly reasonable,” says
Ron Fiamma, vice president and director
of private collections for the Private Client
Group division of Chartis. Fiamma notes an
average filed rate across most major carriers
for physical damage is 30 to 40 cents per $100
of liability, dependent on driving record.
For collectors with just a single classic
car in the garage, worth in the mid-five figures, an average premium is likely to be in
the $200-$400 per year range, depending
on the liability requirements of the state
where the insured resides.
Like many of the insurance executives
who operate in this space, Rick Drewry, a
senior specialist in motorcycles and col-
lector cars at American Modern Insurance
Group (AMIG), is a collector himself—and
so able to give a good personal example
of just how affordable coverage is. “I have
four of my own classic cars, worth about
$160,000, insured with AMIG, and I pay
just $560 a year,” he says.
2 LIMITED USE
The reasons for the substantially lower
rates are twofold. First and foremost is that
usage of these cars is expected to be strictly
limited to special occasions—they are not
meant to be used for the daily commute or
taking the kids to soccer practice.
Jim Fiske, vice president and U.S. market-
ing manager for Chubb Personal Insurance,
notes that with average premiums just one-
third of what a traditional policy would be, it’s
imperative for Chubb during the underwrit-
ing process “to differentiate between people
who want cheap coverage for their tired, old
Plymouth versus the true enthusiast.”
“With respect to underwriting, we need
to make sure the cars that want this type of
coverage really are collector autos,” agrees
Fiamma. “We encourage our insureds to use
their cars; they’re meant to be enjoyed—
but not more than on a recreational basis.”
One basic way to filter out problem
accounts: Insureds typically need at least
one standard-insured auto for every
licensed driver in the household. “If the
insured’s household has three drivers but
only two cars, chances are the collector car
is probably going to be used at a much different level than what is anticipated by the
rating structure,” says Fiske.
Some policies will specify actual mileage
limits. At American Collectors, for example,
“most of our clients select the 2,500-mile tier,”
says CEO Jill Bookman. “We do offer a 5,000-
mile tier and a 7,500-mile ‘Freedom Tier,’”
which, for a roughly 50 percent rate premium, gives clients the flexibility to take the
car to work once in a while or on vacation.
AMIG is “very diverse in how we set
up a policy; we provide tons of options,”
says Drewry. While the underwriter offers
an unlimited-miles policy, it also offers
less-expensive, mileage-restricted options.
“We have a mileage program strictly to
price correctly for people who don’t use
their cars a lot; someone who drives 1,000
to 3,000 miles should pay much less
