like a work of art

On May 5, a 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupe sold for $142 million during an auction at the Mercedes-Benz Museum in Stuttgart, Germany. It was the highest price ever paid for a car at auction, far surpassing Ferrari’s eight-figure sales that had long surpassed first-class billing.

The identity remains a mystery of the person who bought the one-of-two silver stunner with gull-wing doors and shiny exhaust pipes sticking out the right side. Despite persistent industry rumours, representatives for Ernesto Bertarelli, a Swiss-Italian billionaire, have flatly denied to Bloomberg that the veteran Mercedes-Benz insider made the lucky deal.

“The buyer is first and foremost an enthusiast and not an investor,” says Simon Kidston, who made the winning bid on behalf of a client, whom he declines to identify. “Is someone who loves Car. The buyer has never asked me how much I think the car could be worth in the future.”

What is certain is that an item of such value will require a rock-solid insurance policy, if the new owner plans to drive it. Technically, if the car is never driven, it won’t legally require insurance, according to analysts at Hagerty, a firm that offers insurance for vintage and collectible vehicles valued at up to $1 billion.

“There are some parts of the world where people don’t insure high-value vehicles,” says Jack Butcher, president of global markets at Hagerty. “They want to keep them off the books.”

like a work of art

A Mercedes-Benz spokesman said the company would not comment on insurance regarding the record-breaking coupe. But according to Abe Barnett, vice president of Signature Services, Hagerty’s top-tier insurance segment, the most obvious bet for the new owner would be to protect it with an inland marine insurance policy, which covers high-value items normally excluded in adequate coverage. .

Numerous factors go into the finalization of rates and the structure of such a policy, such as location, storage and type of vehicle, but in general, insuring a $100 million vehicle costs more than $100,000 to insure annually.

“That would essentially treat it like a piece of jewelry or art,” says Barnett. “It provides a much broader form of coverage, as opposed to a standard auto policy, which would be comprehensive and collision coverage. When they take their vehicle, whether they want to take it to a contest or take it to a rally or tour, that policy will adequately cover it.”

Galleries and art fairs often use this form of coverage to protect paintings, sculptures, prints, collections and cultural artifacts, and elite garages do it for automobiles. This includes protection against damage or loss due to theft, accident or mishandling, or in the event of an undetermined cause of property loss. It would also help cover the costs of repairing or replacing property damaged by fire, wind, hail, or water.

However, Inland Marine policies do not cover war, nuclear or other damage. They do not cover mechanical failures or problems that occur due to regular use, such as tire blowouts, hose repairs, or brake replacements. If you (or, more likely, your garage manager) forget to change the oil in your multi-million dollar Mercedes, that’s up to you. Annual maintenance on such vehicles can cost tens of thousands of dollars in storage, fuel, parts and service.

“In general, it’s customary for insurance companies not to try to insure what they consider normal wear and tear,” Butcher says.

How much is it worth to you?

The most important thing when signing a policy of this type is to agree on the value for which the vehicle will be insured. That number can be well above what was paid for it; it can also increase when a car is restored. Kidston declined to discuss details of how much his client’s vehicle would be insured for.

Preservation or restoration of a single million dollar vehicle can significantly increase its value, although this was not the case with the Uhlenhaut Coupé.

“Since the car has always been a jewel of the Mercedes-Benz Museum, it has always been meticulously maintained in excellent condition,” says Haynes. “There really wasn’t any work to be done on the car before it was offered for sale, as far as we know.”

For vehicles that need work, the insurance provider often contacts high-net-worth owners on a quarterly basis to determine the progress of the project and adjust the value of the insurance policy accordingly.

keeping it safe

How and where the car will be stored will probably affect the price of the insurance policy more than anything else. “A lot of wealthy people live in beautiful areas that tend to be catastrophically exposed,” says Butcher, citing private islands, forested mountains and sheer cliffs.

Keeping a vehicular asset out of wildfire and hurricane zones is vital. So is storing it in a temperature-controlled environment with effective security cameras, burglar alarms, and sprinkler systems that can spray fire-retardant foam. Some collectors go as far as preemptively clearing brush in a 200-foot radius around where they store the car and digging retention ponds to dampen the flames in case a fire approaches—anything to protect the investment.

One additional consideration: “Insurers will want to know the age of the people who are likely to be driving it,” says Kidston. “And if the car is being transported, they will often ask that there be two drivers on the truck and not leave it unattended for any period of time.” Transportation typically costs between $2,000 and $10,000 or more, depending on whether the vehicle is transported via flatbed truck, covered carrier, boat, or cargo plane.

There is generally no deductible for ultra rare cars. If an owner insists on one, it could be 1%, 5% or 10% of the car’s total insured value, Butcher says. Having a deductible is one way to avoid having to file an insurance claim for minor incidents like dents or broken wheels.

“If someone is comfortable absorbing the cost, they may want to fix it themselves,” says Barnett. “They might say, ‘Well, it’s $50,000 or $100,000. I feel comfortable paying that out of pocket.’”

Just like with your everyday auto insurance policy, not having to file a claim helps keep your insurance premium as low as possible. “It’s not a crazy amount, but it does reduce it enough,” says Barnett. (A single claim on a policy probably wouldn’t increase rates.) Ethically, anyone selling a vehicle should disclose even small incidents that happened to them, whether or not the incident was reported to insurance.

Reborn from the ashes

Even if the unthinkable happens and the car is damaged in a catastrophic event like a plane crash or flood, all is not necessarily lost, assuming it can be repaired.

“Of course, nobody likes that in the history of a car, but at least the car isn’t a total loss,” says Kidston. With extreme damage, the owner would talk to the insurance company about reducing the value of the car, pending restoration.

In rare cases, car values ​​have risen to greater heights after cosmetic damage. In 2019 in Durham, North Carolina, a gas line exploded in front of a warehouse that stored about half of Ingram’s prestigious car collection. An extremely rare 1961 Porsche 356 B Carrera GTL Abarth, so valuable that an original tool kit alone is worth $10,000, was one of many vehicles damaged when the roof collapsed.

Following an intensive 4,000-hour restoration of the diminutive silver race car by the family-owned team called Road Scholars, the Abarth made a full comeback in just four months, winning its class at the Pebble Beach Concours d’Elegance. She then took top honors in her class at the 2022 Amelia Island Concours d’Elegance. In May, she won her class at the Villa D’Este Concours d’Elegance.

Call that a triple crowned comeback and then some, with the help of an unconditional insurance policy.

Photograph: A vintage Mercedes-Benz 300 SL Coupe W198 (1955) at the Mille Miglia classic car race on May 17, 2014 in Colle di Val d’Elsa, Tuscany, Italy. Photo Credit: Bigstock

Copyright 2022 Bloomberg.

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