A Year After Sandy, Collectors Consider the Lessons

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Scott Nadler's home in Oceanside, N.Y., was among the thousands severely damaged when Hurricane Sandy's storm surge pummeled the South Shore of Long Island nearly a year ago. There was some relief, however, in finding that although saltwater had flooded his garage, the 1971 Chevrolet Chevelle SS 396 he'd owned for 10 years was repairable.

Quick action helped prevent the car's total loss. Within a day, Mr. Nadler, who drives a tractor-trailer for a living, flushed the engine fluids, preventing the internal havoc that saltwater might cause. His insurance company paid about $10,000 for mechanical repairs and thousands more for a new interior, a thorough cleanup and some repainting.

The work was done by White Glove Custom Collision in Baldwin, N.Y., and Mr. Nadler was pleased to again be driving his Chevy, an icon of the muscle car era, before the storm's one-year anniversary.

"That car is a part of me," he said.

Fortunately for Mr. Nadler, the Chevelle was covered by a collector-car insurance policy. Had it been deemed a total loss, as often happens with cars flooded with saltwater, Mr. Nadler's policy would have paid a guaranteed sum that he and Hagerty, which specializes in collector vehicles, had agreed to when the policy was purchased.

Several companies offer such policies, which also include liability and other types of coverage, and can be later updated to reflect changes in the car's potential resale value. Collector-car policies typically place some restrictions on the car's usage, including annual mileage limits, for example.

The importance of buying specialized insurance was probably the most valuable lesson that stuck with classic-car owners in Sandy's aftermath. A standard auto policy pays what companies define as the actual cash value, which may be many thousands of dollars below the car's true market value, according to Rick Drewry, senior claims specialist for collector cars and motorcycles at American Modern Insurance. He said the company's collector-car policies included an agreed-value provision.

"It's peace of mind that if it's totaled, it's a contract price," Mr. Drewry said. "You know exactly what you'll get."

The wording is important. Another type of policy, called stated value by insurance companies, is not the same thing. Although the car owner can set a value for the car, an insurance claim payout could potentially reduce that to account for depreciation since the policy was purchased.

Unlike homeowners' insurance, collector-car policies typically do not exclude flood damage, said McKeel Hagerty, president and chief executive of Hagerty. It was flooding, rather than wind, that did the most damage to cars in this storm, he pointed out.

That distinction has been a sore point for many homeowners, whose policies covered wind damage but not the destruction caused by water from Sandy's storm surge.

Mr. Nadler's Chevelle was one of 1,213 Sandy-related claims that the company addressed. Mr. Hagerty said that more than 70 percent of those were total losses, though many more cars than that were ruined -- some 250,000 in all, according to estimates from the Insurance Information Institute.

"We estimate that there were probably 10,000 collector cars at or near total loss," he said. "It takes three feet or less of water to destroy a car. If it was submerged up to the windshield in saltwater, that's pretty much a total."

Valley Stream, a few miles inland from Mr. Nadler's house, suffered far less, but Kevin Mackay dealt with the effects of saltwater damage to his customers' Corvettes. His shop, Corvette Repair, assessed 15 newer and classic models. One client lost seven cars.

But for some who asked Mr. Mackay to store their cars before the storm struck, there was good news.

"We picked up about a dozen cars," he said. "One customer who stored two Corvettes was glad he did; his garage was destroyed."

Insurance companies judged most of the cars that Mr. Mackay inspected to be total losses. He was able to save a couple, including a 1967 Sting Ray. Water had covered its seats and console but stopped below the fuse box and main wiring harness. A Corvette's fiberglass body will not rust, but the rest of the car is vulnerable.

Mr. Mackay's shop removed and rebuilt the car's suspension systems and replaced numerous interior parts, which he said are readily available for vintage models. Where rust had started, parts were removed and bead-blasted, a cleaning method that sprays fine glass beads using air pressure, to remove corrosion.

Value is a determining factor in whether a car should be restored, Mr. Mackay explained. A well-optioned vintage Corvette with rare performance equipment can be worth more than $100,000, making expensive repair work viable.

"With the later-model cars, because of the computers, once saltwater gets in they're totaled," he said. "Salt acts like acid on metal and electrical parts."

One 1998 model could not be saved.

"That car had been fully submerged. It was covered in slime and mold," he said. "The later models might be worth $10,000 to $30,000, but you could have $50,000 or more in damage, so the insurance company totals it."

Michael Zachowski, whose 1976 Triumph TR6 was insured by American Modern, was one of many owners to experience Sandy's extraordinary inland reach.

When he built his home on the Mullica River in rural Sweetwater, N.J., 10 years ago, longtime residents there told him flooding would not be a worry. Still, he had the house built on a slab raised nine feet, and the garage was raised seven feet.

Before the hurricane made landfall, Mr. Zachowski moved the family's cars to higher ground on his street. The TR6 stayed in the garage.

"I never thought the Triumph would be affected," he said.

The Atlantic Ocean, more than 20 miles to the east, pushed through Great Bay and moved the snaking river in the opposite direction. Around midnight, with water lapping at his garage, Mr. Zachowski and his son, Zachary, 17, rushed to elevate the Triumph using the car's scissor jack.

The water rose quickly, coming within an inch of entering the house and flooding the garage to 23 inches. The carpets and seats of the British roadster were soaked, but fortunately not with saltwater.

In case of a total loss, Mr. Zachowski's collector-car insurance policy with American Modern had an agreed value of $12,000. To his relief, however, the Triumph was repairable. Approximately $6,000 paid by insurance covered the storm-related repairs, and Mr. Zachowski financed the remainder of a restoration that had begun before the storm. He took his first drive in the repaired car in September.

In the days before Sandy hit, a number of American Modern policyholders accepted the company's offer to transport their cars to safer locations of their choosing.

Insurance companies may expand efforts to help owners take preventive measures in the future. Mr. Hagerty said his company was investigating ways to help policyholders in flood-prone areas move and store their cars.

"We pay regardless of whether they try to move the car or not," he said. "But in so many instances, cars could have been saved by moving them just a half-mile."

Far from any flooding, another yellow Triumph did not fare as well as Mr. Zachowski's car. Mark Hagan, an artist, jazz musician and inventor, had stored his 1973 GT6, which was in excellent original condition, in the garage at his Nyack, N.Y., home. Through the night, Sandy's punishing winds brought down 20 trees on his property. One crushed the garage and damaged the Triumph beyond repair.

Mr. Hagan did not have collector-car insurance but rather a standard auto policy with a stated-value rider. He had set the car's worth at $7,000, which he admitted was about half its market value.

"I did that to keep the premium low," he said.

Although the $7,000 payout he received was double what Mr. Hagan had paid for the car, it was not enough to replace the GT6. He instead invested the money in aquaSketch, which makes a wrist-worn underwater writing slate that he invented -- a device that might be useful for insurance adjusters working during a storm.

Many owners couldn't bear to part with their saltwater-damaged treasures. Mr. Hagerty said that half the owners who received guaranteed-value payouts for their ruined cars also exercised their right to buy them back for the salvage value, either to repair or use as a parts source for restoring a similar model.

It was a similar story at American Modern.

"We carefully explain what they'd be facing in trying to restore such a car," Mr. Drewry said. "They're not easy restorations. But if you're doing the labor yourself, it's not a bad car to buy."

autonews

This article originally appeared in The New York Times. First Published October 19, 2013 2:01 PM


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