Agreed vs. stated value

Agreed value protection, also called an “agreed value policy,” means that a collector car is insured for a specific dollar amount that the insured and carrier have agreed upon. The value is based on the car's number of original parts and the quality workmanship of modified parts. The owner of the vehicle will receive the agreed amount in the event the car is totaled, no matter the market fluctuations.

In comparison, a “stated value policy” takes market value fluctuations into account. For example, under a stated value policy (often used by standard auto carriers), a collector car may be insured at the cash value of $20,000. But if the car is totaled in an accident, the car owner may only receive $15,000 because of a drop in market value.

Read related: “Collector car niche rolling on despite economy.”

Assess the value

One of your biggest challenges may be to accurately assess a car's value. A specialty carrier can help you determine what the agreed value should be. You'll just need to gather some of the following information:

Identify whether it's a professionally restored original car, an un-restored original, or a “driver” car.:

• A professionally restored original has been restored to its original specifications yet still has the original engine and drive train. These cars demand a premium, especially if everything is documented.
• An un-restored original is a completely original car that has the original paint, interior, engine and drive train.
• A driver car, the most common collector car, is perfect for the enthusiast who can't afford a six-figure investment. It's still collectible but not worth as much as an original because of changes made to the engine, interior and paint.

You need to understand whether or not modifications warrant an increase in value by asking:

• What type of engine? Who built it? How much did they invest?
• What body modifications have they made? (chopped, channeled, sectioned, etc.)
• Who painted it? How much did they invest?
• Who did the interior work? Is it custom or factory replacement?
• What type of transmission and differential do they have? How much did they invest in the drive train?

Adhere to specialty guidelines

Most collector car owners “baby” their cars, driving them infrequently, storing them in a secure garage and keeping a near-perfect maintenance record. Specialty carriers recognize this and price their policies accordingly.

Read related: “Tapping into the collector and classic car market.”

However, as the agent, you need to make sure that the car owner is staying within the guidelines of the specialty underwriting rules. Here's a list of questions that can help you assess this sort of detail:

• How many miles do they drive each year?
• Is this car kept in a garage throughout the year when not in use?
• Do they drive to and from work with it?

Become an enthusiast

Keep an eye on what's happening in the collector car world. Go to car shows and talk to people. While you don't need to be a “gear head,” you do need to be able to talk like a “car guy.”

Most of all, have fun. Collector car guys are loyal and passionate, so become part of the hobby and understand the people. If you get in good with a handful of enthusiasts and they are happy with your service, word will spread.

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Rick Drewry is senior claims specialist, collector vehicle & motorcycle, at American Modern Insurance Group. He has been passionate about collector cars since he was a kid, and has personally restored several automobiles. Rick can be reached at [email protected].