Italian sports-car maker Ferrari built 39 of its 250 GTOs in the early 1960s, selling them to select buyers for about $18,000 each. Today, the racer is the most expensive and collectible car in the world. A red 1962 Ferrari 250 GTO fetched more than $38 million at a Bonham’s auction in Carmel, Calif., in 2014—a record public sale for a vintage car—and at least one other is said to have been sold privately for more than $50 million.
“Talk about an exclusive club,” says Ronald Fiamma, global head of private collections for AIG’s private client group. “Each one has a unique history, each one has been raced—some by famous racers, some by gentleman racers, and they drive them just as hard as they drive any car. It’s exhilarating to watch,” he says.
That’s quite a statement from a top executive at a major insurance company, who would be right to prefer the multimillion-dollar cars be safely locked in their garages. Still, AIG insures 18 of these prized cars, which spend plenty of time on the road.
The most serious collectors who insure with AIG pay an annual premium for all their insurance needs totaling at least $250,000. The average client who falls into this segment has nine homes, $20 million in fine art, $5 million in jewelry, a boat or plane or both, a wine collection, and perhaps a garage full of vintage automobiles, all requiring bespoke levels of service.
Of AIG’s 85,000 clients worldwide, 650 have insurance portfolios on this level, while another 400 get comparable risk management support “because of who they are,” Fiamma says. While he won’t reveal names or specifics, Fiamma says these are often celebrities or high-profile “titans of industry.”
If you have a lot of collectible cars, it pays to go with a comprehensive insurer like AIG, or competitors like Chubb or Pure—rather than a specialty collectible-car insurer like Hagerty or Leland-West—says Steve Linden, a classic-car consultant. A comprehensive insurer likely will make a client whole if an accident reduces value. If a $10 million Ferrari drops to $8 million in value after an accident, an insurer like AIG will write a $2 million check to the owner, he says. A specialty-car insurer may not.
Of course, accidents can—and do—happen. One Ferrari owner who prefers anonymity recalls driving his silver Ferrari GT Short-Wheelbase Berlinetta on a rough road during a rally in the Western U.S., when another racer sprayed gravel over his $12 million coupe. “The next thing I know, my car looked like it had measles,” he recalls.
The owner—who bought the car years ago for “hundreds of thousands of dollars”—filed a claim. Fiamma “insisted on painting the entire car.” The $40,000 cost was steep, but it restored the car to its full worth.
Fiamma tells the story of another Ferrari owner who made a spectacular mess of his Ferrari Enzo, one of 400 supercars built from 2002 to about 2004. No one was hurt, but the car’s fiberglass chassis was shattered. AIG was ready to write a check for the $950,000 value of the car. But the client said, “I don’t need the money. I want the car. Just see what you can do,” he recalls.
The insurer contacted Ferrari. With the original vehicle identification number stamped on the engine and body, and plates still intact, Fiamma was told to sweep what was left of the car into a container and send it to Italy. The cost of shipping, rebuilding the car using the original blueprints, and flying the owner out to see it twice was about $600,000.
“It would have been easier for us to write the check for $950,000,” Fiamma says. But, he adds, for this client, making him “whole” meant “making sure he got to keep the car.”
Writing big checks is tough, but Fiamma has no qualms about taking on more collectors. In fact, his goal is to insure the 21 Ferrari 250 GTOs he doesn’t already cover, and he even teases, “Someday, we’ll have them all.”
Article by Abby Schutz, courtesy of PENTA: <https://www.barrons.com/articles/what-it-takes-to-insure-a-ferrari-1529294430?shareToken=staff9059d38b940a2b978ab5a00a1aff6&ref=article_email_share>.