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Classic, vintage or super car – from hobby to investment

30 November 2021 Elite Risk Acceptances
Tarina Vlok, MD at Elite Risk Acceptances

Tarina Vlok, MD at Elite Risk Acceptances

Specialist insurance puts you in the driver seat to protect your investment

In the first week of December South Africa will see one of the biggest private collection of classic cars in the country go under the hammer. With names like the 1960 MGA Coupe, the rare 1971 Boattail Buick Riviera, a Ford Capri Perana V8, and an original Ford Mustang Mach, classic car enthusiasts may decide to rev up a gear and turn their passion into an investment.

But, says Tarina Vlok, MD at Elite Risk Acceptances, a specialist high-net worth insurer and division of Old Mutual Insure, if you want to protect your vintage or even super car investment, it should always be treated with care and you should make sure that it is properly insured.

“Luxury super cars prove popular as alternative investments, but meticulous maintenance is a must,” says Vlok. “Bespoke vehicles with expensive price tags present a unique risk to their owners and in many cases the risks are amplified with classic cars, depending on how rare the vehicle is.”

She adds that some clients go to extreme lengths to protect their investment, including never driving the car and turning the wheels by hand, as well as parking it behind security-controlled glass walls. “They understand the risks that come with buying such a car, what their insurer expects of them and why it is important to ensure it remains immaculate, but they also want to enjoy looking at their investment.”

Surprisingly, amidst global semi-conductor shortages, production delays and missed build slots, the pandemic hasn’t stopped the growth and demand for luxury and classic cars amongst high-net-worth individuals. Luxury automaker Porsche says it's achieved a record result for the first three quarters of 2021: having delivered 217 198 vehicles worldwide between January and September.

According to Knight Frank, the value of the classic car market internationally has over the past 10 years appreciated more than that of watches, wine, jewellery, stamps, and art. Furthermore, a report by Fortune Business Insights, suggests the global luxury car market size is set to grow to USD 655.0 billion in 2027. The massive investments in luxury cars can be attributable to several reasons, among which comfort and quality stand out. Moreover, the growing trend of electric luxury vehicles worldwide is also fuelling the demand. Major luxury car manufacturers are launching electric variants of their vehicles, due to growing environmental concerns and increasing fuel prices.

What you need to know about protecting the value of your investment

Vlok says that there is no standard book value for these cars once they’ve been traded, because there aren’t high enough volumes of them being sold in South Africa. So you need to partner with specialists that have the experience to understand the specific requirements in managing, maintaining and insuring these luxury super cars.

Below are her top tips on what to consider when purchasing your fancy four-wheeled treasure, whether before the end of 2021, or if you are considering turning your passion for classics and supercars into an investment in 2022.

• Vintage or classic cars (anything over 30 years old) usually appreciate in value over time, while modern luxury cars tend to depreciate, except for limited editions. That’s why it’s very important to ensure your car is kept in the best possible condition.

• It’s worth having a thorough annual evaluation done by a knowledgeable professional to ensure your prized motor is in tip-top condition and remains insured for the appropriate value.

• Maintenance of these cars, in terms of ensuring the bodywork is at a level at which it needs to be to retain value, is important as it’s expensive to correct – so keeping a lookout for corrosion of paint and rust is a must.

• Find a specialist insurer that has the capacity and knowledge to insure your luxury car at competitive rates.

• As a luxury car owner, you will need to be prepared that scarcity will cost you in the form of higher premiums, to cover your vehicle from any type of risk. Before you select your insurance policy, ensure that your insurance provider has the capacity, know-how, and repair partners to give you the cover aligned to your needs.

• Speak with your broker or insurer about the specific benefits and requirements of your luxury vehicle policy. They might offer specific coverage or lower rates if you keep your vehicle in storage for part of the year. Make sure you ask about limits and the terms and conditions.

• Most insurers will only allow the registered owner and spouse to drive the vehicle. Please ensure that you know exactly who is authorised to drive your super car or vintage vehicle.

• If your insurer wants you to install a tracking device, ensure that you find the most appropriate solution for your vehicle. You can also speak to your vehicle manufacturer about on-board tracking capabilities, which are increasingly standard in late model luxury vehicles.

“Luxury, style, exclusivity, and scarcity: We know that your risk requirements are as unique as your bespoke motor vehicle; with elegance tailored to align with your style and individuality. What you expect from your car, you expect from your insurance: impeccable performance, absolute reliability and one-of-a-kind protection,” concludes Vlok.

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