Fine Art on the Freeway: Joys and Risks of Collecting Classic Cars

Pebble Beach. Quick what comes to mind? If it’s a slow parade of lovingly restored vintage race cars and roadsters driving along the dramatic Pacific coast cliffs—and not championship golf—then you’ve most certainly caught the classic car bug.

Working with car collectors is a joy because they are exceptionally passionate about their pursuit. Our clients not only appreciate the beauty and craftsmanship of these automobiles, they also have a blast with their acquisitions—driving, racing and sharing the experience with the tight-knit community of equally engaged collectors.

Whether you have a Bugatti or Bentley competing in this summer’s Concours d'Elegance or are contemplating which vehicle will start you down this road, we’re here to help make sure your classic car collection brings more pleasure than concern. Below, our team answers a few common questions around protecting an investment in classic cars.

What do I need to worry about?
Everything that concerns a regular car owner—accidents, breakdowns and theft— but multiplied by 10. A classic or vintage car is fragile, rare and valuable. In fact, sometimes it is irreplaceable so there are unique risks when owning a collectible like this.

What are some of those risks?
Well classic cars are unique, which means the risk of theft or scam is higher. For example, after participating in a vintage car show, you will want to take necessary precautions to make sure your car gets safely put inside the garage and not in the hands of a thief. Another concern is market scams, which happens more often than you think. One client bought a vintage car on eBay only to discover that the purported “original” parts were decades younger than the rest of the car (meaning the parts were replaced…not refurbished as most collectors would want). To minimize these risks, we recommend to only buy from reputable dealers. In addition, have the vehicle appraised by an independent expert and demand proof you are buying from the rightful owner. If you need help securing the right vendor, your broker can provide you with a list of recommendations with deep expertise in the market.

Should I actually drive my car(s)?
Absolutely! That’s what makes collecting cars more fun than collecting stamps. But, be prepared for breakdowns—have a trusted towing service and knowledgeable mechanic lined up before you hit the road. And (buzzkill moment…) no personal automobile policies cover drag racing. So as tempting as it may be to reenact a scene from American Graffiti, a claim involving an accident will most likely be denied.

How should I store my car(s)?
We recommend you store it in a well-equipped garage with suitable alarms and security systems. Make sure the building protects against rain, ice, floods and whatever natural disasters are common in your area. That means if it’s in a separate structure on your property, it should conform to the same standards of your main residence—you may not want to situate it in a low-lying area or have a flat roof where snow can pile up all winter long. Even a slow leak or a few diligent mice can cause a lot of damage, so make sure someone checks on the car regularly if you can’t.

Does my regular auto insurance cover my car(s)?
Not really. You might buy coverage for your Lamborghini from the same company that insures the family Lexus, but the policies need different terms. Most important, the “settlement agreement” should treat the value of the car like a work of art that fluctuates with the market, because traditional insurance assumes a car gets less valuable every year. Whereas your car, most likely appreciates over time. With that said, you will also want enough coverage to recoup a loss that happens after the car appreciates. Similar to art, don’t forget to get it appraised every three to five years to keep the policy limits in line with the market.

Do you recommend any other protections for my policy?
We always recommend having a quick chat with your insurance broker. That will allow you to discuss the specifics surrounding your car(s). However to whet your appetite, here are two critical points worth noting as you pull out your policies.

    • The policy should cover “diminution of value” of the car after an accident in addition to the repair costs. As we alluded to earlier, if that fender-bender means you need a new fender, the car is worth less than if it still had the original steel, even if there’s no difference to the untrained eye.
    • You might want to consider “full transit coverage.” No, sadly this does not mean coverage when you ship your car cross country to participate in the Pebble Beach Car Rally. But rather, if you have a covered loss and need to transport your car for repairs, this coverage can be worthwhile.

We may have just scratched the surface on your long list of questions, so set aside some time to speak with your broker. They are available to assist you with any concerns or additional questions surrounding that newly purchased classic car or the red beauty that is already a part of your collection. With a few precautions, you can spend the next sunny day on the open road, not a cloud or worry in sight.

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