If you follow the motoring press, then it can't have escaped your notice that a very special Mercedes has just broken the world record for the sale of a classic car – although that should probably read “smashed” as the final sale price was more than double the previous high point.
The car in question is one of a pair of prototype 300 SLR Uhlenhaut Coupes owned by Mercedes and kept in their own private collection. Developed from the world championship winning W196R driven by Juan Manuel Fangio, the car combined cutting edge motorsport technology with the styling of the production 300 SL Gullwing model.
Legal for road use, the car was effectively the company vehicle for its creator, Rudolf Uhlenhaut who was race engineer to Fangio and used by him as a daily driver.
The car was sold by RM Sotheby's with international car dealer Simon Kidston handling the winning bid by phone to (at the time of writing) an anonymous buyer. The final price? £114,000,000 – comfortably eclipsing the previous record of US$70m. A Ferrari GTO in case you were wondering.
This not only makes the SLR the most expensive car in the world, but for the first time puts a car into the top ten most valuable items ever sold by auction.
We sat down with Simon Ambler, Head of Lockton Performance, to find out how one would go about insuring the world's most expensive motor car – surely a difficult task.
Simon, the obvious first question is whether Lockton would be able to insure a £100m+ car?
Without wanting to sound both blasé and a little over-confident, absolutely yes! It's hard not to be a bit overawed by such an amazing motor car, both as an insurance broker and also a motoring enthusiast but when it comes down to it, this is a car which can be insured – it's that simple.
So how would you approach arranging insurance for this sort of car?
Well, the first thing to remember is that purchase value and what it actually costs to repair vehicles are not always the same. This is particularly true of older cars where much of their value relates to rarity, ownership and things like competition history – with the SLR being one of a pair and having stayed with Mercedes all its life, that ticks two of those boxes immediately, particularly as they've said that the other car will never be sold.
The cost to undertake repairs on a car like this is likely to be a fraction of the price paid, which of course sets the car's value. I suspect that Mercedes themselves would be the first port of call if the car were ever to be damaged.
What would you look for in particular if you were being asked to arrange the cover?
I would begin by finding out what the owner plans to do with the car. Whilst there is always a good case for a car to be used and driven, some owners will choose to use the car sparingly so we focus on where it will be kept and where it will travel.
Any insurers biggest concern is a total loss, which in this case would be a total disappearance of the car. Even the rarest cars can be rebuilt providing there is something left of them. Theft of such a car is rarer than the car itself (reaches and touches wood) given it would be nigh on impossible to do anything with it once sold.
We anticipate, no hope, that the car will be shown at the world's best Concours D'Elegance events and other motoring spectacles so perhaps the most concerning element would be transit over sea where there is a small risk that the vehicle could join Davy Jones' locker and lost forever. We can arrange a policy which will cover damage to a vehicle anywhere in the world, including whilst being moved by air or sea.
The risk of fire is the big one when the car is being stored – whether with its owner or at another facility so we look at how the building is constructed and what measures are in place to both reduce the risk of a fire starting and to reduce its impact by alerting or extinguishing. We have written about this before - cick here.
We have seen recently that a fire can take hold quickly and spread rapidly in a car storage environment, meaning that the fire will cause significant damage before it can be brought under control.
So, whilst insurers primary rating is on the damage element there still always lies the possibility of a total loss and at this level insurers would be purchasing reinsurance so would have to pass this cost onto the owner.
Can the owner expect to pay a massive premium?
We generally don't guesstimate the cost of a policy but the premium for more expensive cars, particularly older vehicles, reflects my earlier comment around repair costs. This means that as the value climbs, the insurer understands that the risk of them having to settle a total loss claim actually reduces.
The bulk of the premium relates to the element of the value that reflects the likely cost to repair significant damage and older cars are, quite simply, less expensive to repair than vehicles made from more exotic materials.
Still, this is a £100m risk that an insurer has to take on and to do so will most likely seek to reinsure a portion which all adds to the costs. This is a process where the insurer effectively takes out their own insurance above a certain point.
However, rating is more akin to insuring fine art so the rate per £1m of cover is a lot less than say its modern Hypercar equivalent, where repairs costs can be a lot higher in the event of major damage.
It sounds like when we said “surely a difficult task” earlier, we may have got this wrong.
We insure a lot of expensive, exotic and high-performance cars – thousands in fact and with a combined value of more than £2bn.
Creating the possible is how we work. This means keeping insurance simple and understanding the people who buy special cars, whether they are old or new, record-breaking values or more attainable.
I wouldn't class this as being a “difficult” motor car to arrange insurance for – simply a much bigger number than many others.
We would like to thank Simon for his time and insight.
If you would like to know more about how Lockton can help you with the insurance cover for your vehicle or collection, then please contact us.
Image credit: © Mercedes-Benz AG