Insuring collectible vehicles is the passion and profession of Hagerty Insurance

How many people do you know who make a living doing what they love? Outside of professional athletes, rock stars, eccentric inventors, and impassioned artistes, answers may be hard to come by. And let's face it: most people don't equate insurance with fun.

McKeel Hagerty, however, is not most people. As the second generation of his family to take the helm of Hagerty Collector Car & Boat Insurance, he combines his passion for collectible vehicles with the business acumen needed to run a successful specialty agency. And if his job requires trips to events like the Pebble Beach Concours d'Elegance classic car weekend, well, he just tries to make the best of it.

Located in Traverse City, Michigan, the agency established by his parents, Frank and Louise, has been a second home to McKeel Hagerty since he was old enough to answer phones and stuff envelopes. A classic car hobbyist and collector, Hagerty was bitten by the automotive bug at an early age. At just 14, he bought a Porsche 9115 for $500 and restored it with the help of his father. At age 18, he obtained his agent's license and started selling the agency's policies for classic watercraft; he continued working in the family business while attending college.

In 1991, when Hagerty Insurance decided to create a program for antique and classic vehicles, McKeel was given the opportunity to develop and market the program. After completing graduate school in 1995, he joined the agency full time as vice president of sales and marketing. He was appointed president in 1998 and today shares responsibility for managing the agency with his sister Kim, who is chief executive officer and chairman.

Collectible car primer

Often the terms antique, classic, and collectible car are used interchangeably. What distinguishes one term from another? "The insurance industry historically referred to the kinds of vehicles we insure as antique and classic," Hagerty responds, "with antique meaning a vehicle over 25 years old and classic meaning a collectible vehicle that's less than 25 years old." Among car collectors, he notes, those terms don't have remotely the same meanings. "To collectors, antique cars are those made before 1925, and true classics are select, very expensive vehicles built within a narrow slice of automotive history: between 1925 and 1948." Hobbyists, Hagerty continues, use the term "collector cars" to refer to all of the kinds of vehicles Hagerty insures that people own for enjoyment or as an investment. "That's the new term that works for everything from a Model T to a brand-new Ferrari. There are so many words to describe collectible vehicles-postwar, hot rods, street rods, muscle cars, exotic cars-and 'collector car' refers to all of them."

What kinds of vehicles qualify for coverage with Hagerty Insurance? "Because our program is based on providing insurance to value, we like to insure vehicles that are used on a limited basis, that are maintained in good or better condition, and that are appreciating rather than depreciating in value," Hagerty says. "Most of our c;irs are not show cars; they're driven bv their owners for fun." As for age, he comments, "Not many American cars built after the 1970s are sought out by collectors, although the Pontiac Viper and some of the newer Corvettes can be considered collectible if they're well maintained and driven just occasionally for pleasure. We do insure some brandnew cars."

What about value? "For us to insure a vehicle, it must be valued at $3,500 or more," Hagerty replies. "A car from the '70s might be worth only about $500, and a fender bender would total it. We avoid those. But we keep an eye on price trends, and if a car like that is well maintained and goes up in value, eventually it might qualify for coverage."

Is there any collectible vehicle the Hagerty agency will not insure? "One category we steer clear of is poorly built, kit-type cars; we have no idea what they're made of, and they can be very dangerous," Hagerty says. "We insure a lot of vintage pickup trucks, but we tend to avoid heavily modified, four-wheel-drive vehicles-the kind that are buried in mud every weekend. Also we don't write certain heavily modified racing cars that are actively raced, although we do insure modified cars and vintage race cars when they're not on the track. We stay away from the really extreme, jet-powered cars."

Understanding exposures

How do the exposures presented by antique and classic vehicles differ from those associated with the ordinary, everyday commuter vehicle-and how does Hagerty's coverage address those exposures? "Typically a collector car is used much less frequently than a regular vehicle, so the collision exposure tends to be less, at least for a wellmaintained car," Hagerty remarks. "But you'd be amazed at the number of things that can damage a vehicle right in your garage: something falling on an aluminum-fender car, the owner trying to do maintenance and starting a fire, the garage roof collapsing under the weight of snow. Because a collector car sits idle more than an everyday vehicle, it's subject to more mechanical problems, like brakes or tires wearing out. Often an older vehicle is easier to hot wire, and most don't have security systems, so we look for cars that are garaged when not in use."

The Hagerty agency's Collector Car Insurance policy is underwritten by an A- rated carrier that is among the country's top 10 insurance groups. About 60% of the business is written through retail independent producers, with the remainder being placed direct with the insurer. The agency insures collectible vehicles in all states except Alaska and Hawaii under its agreed value form. "Of course we have to accommodate the various state regulatory requirements; for example, a couple of states don't allow agreed value, so there we write on a stated value basis," Hagerty notes. "Overall, though, we try to keep our policy as uniform as possible. In most states we write an agreed value, no deductible, limited use auto policy."

How do rates for the Collector Car policy compare with those for a standard auto policy? "They're probably about 25% of what a normal auto policy would cost, so it's very good coverage for very little money," Hagerty says. The premium for physical damage coverage is approximately 60 cents per $100 of value. For example, the physical damage premium on a 1965 Mustang worth $10,000 would be $60. Liability premiums are based on a vehicle's age.

For $100,000 worth of liability coverage, the cost is 60 cents per $100 of value for vehicles 25 years and older; it's $1.40 per $100 for vehicles less than 25 years old. Where state regulations permit, Hagerty charges only one liability fee no matter how many cars a collector owns.

The policy offers flexible usage guidelines for insureds that do not strictly limit the annual accrued mileage on a classic vehicle, provided it is driven on a limited basis. Other features are automatic coverage for new purchases and auto show medical reimbursement. A damaged vehicle can be repaired at a facility of the insured's choice. The agency does not insure vehicles used for transportation of goods or passengers, for daily transportation, or while racing. A limited use business endorsement and a racing paddock endorsement, however, are available in some states.

Hagerty Protection Network

As an extension of its collector car coverage, the Hagerty agency last summer introduced the Hagerty Protection Network, which offers insureds an array of value-added services and resources. At the core of the program is Flatbed Roadside Assistance, which provides 24/7 road service dispatch that covers flatbed towing and the most common mechanical assistance. Hagerty's research indicates that collector car owners are six times more likely to experience mechanical breakdowns, battery failures, or flat tires or require vehicle towing than they are to file an insurance claim for damage. Flatbed towing, according to Hagerty's research, is the safest and most secure towing method for

transporting classic and vintage cars.

The services available under the Roadside Assistance program are:

* Up to three roadside service calls per year, up to $50 per incident (an optional upgrade to $100 is available); parts and labor are additional

* Roadside adjustments by a mobile mechanic to enable the vehicle to operate under its own power or be towed to the nearest qualified repair facility

* Battery jump-starts or delivery of a new battery if necessary

* Tire service to install an inflated spare or deliver a replacement tire

* Fuel delivery if the vehicle runs out of gas

* Lockout service, including assistance to replace lost keys