Detroit Free Press Mark Phelan column

Aug. 10--Frank Hagerty was looking for a hobby, something to do in his retirement, but the business he started in his Traverse City basement became the world's largest insurer of collectible cars and wooden boats.

Thirty years after Frank started the business because none of the insurance companies he represented would underwrite his prized wooden power boat, Hagerty Insurance is a leading member of the Traverse City business community and a Michigan success story with about 670 employees worldwide and more than $200 million in premiums sold last year.

"It begins and ends with a love of the automobile," Frank's son McKeel Hagerty, president and CEO, told me recently, standing in his office lined with car memorabilia and custom electric guitars. His father, who died this spring at 79, was mad about cars, but not fancy ones. He began his insurance business in Traverse City by striking up conversations with customers about their cars.

"We were Ford people," McKeel said with pride. "There were no Duesenbergs in our family. There were always car restoration projects in our garage."

As teenagers, he and his two older sisters each got to pick a vintage car they'd restore with their father for their first car. His sisters picked a Chevrolet Corvair station wagon and 1960 Porsche roadster. At 12, McKeel paid $500 for a trashed '67 Porsche 911S. He and his father had the car ready to drive when McKeel got his license at 16. He still owns the car and occasionally drives it to work.

The company insures more than a million collectible cars and 13,000 wooden boats in the U.S., Canada and Europe. Hagerty also insures car museums, restoration shops and classic car dealers.

Its modern headquarters in downtown Traverse City houses 500 employees, classic boats and cars and a treasure trove of information about collectible vehicles. The company's magazine, Hagerty Classic Cars, has 600,000 subscribers and could become America's highest-circulation print automotive magazine.

Hagerty's staff and cars will be prominent at Woodward Dream Cruise events this week, including a '65 Ford Mustang coupe the company's workers restored to like-new condition last winter. Look for the sparkling white Mustang on Woodward this week, and in Mustang Alley on West Nine Mile Road in Ferndale Saturday.

"Everyone on my team really enjoys the opportunity to work on the cars," said Nick Cassell from Hagerty's IT department. "Working on a part that's unique to that car helps us understand the restoration process and what our customers do."

Much of Hagerty's success stems from understanding car collectors and treating them differently from the giant insurers focused on contemporary vehicles. The company guarantees full value on claims, monitors auctions and private sales to see whether the value of each car is rising or falling, and offers flatbed road service, a favorite with owners of finicky old cars.

Hagerty is building a database on collectible cars, including a vehicle identification number decoder to help owners figure out exactly what they have. VINs weren't standardized until 1981. That can makes ID'ing some vintage cars as much art as science. Another part of the company is collecting stories associated with significant cars while the people involved with the vehicles are still alive. Owners can also record their stories on hagerty.com, which aims to have 5,000 stories this year.

Hagerty's call center handles thousands of calls from customers daily, discussing everything from claims to requests for help finding rare spare parts.

The average value of the cars Hagerty insures is $30,000.

"This is not a sport that's just for the wealthy," McKeel said. "You can get a great pickup, an MGB or a 1970s car for a few thousand dollars.

"At the higher end of the collectible spectrum, though, you're talking about history. The automobile is the most significant industrial artifact of the last 150 years."

Hagerty runs events to teach kids how to drive classic cars with manual transmissions and how to evaluate a vintage car. The company is also involved in initiatives to document and preserve historic vehicles.

Privately owned, Hagerty doesn't have to report financial results, but McKeel says income from premiums is growing at more than 10% annually. He's been approached by larger companies that wanted to buy the business, but McKeel has resisted the offers. In a few cases, he has partnered with some larger insurers, giving them access to Hagerty's expertise.

"We're a car business," he said. "The beginning and end of it is that we love cars and understand people who love them."

Contact Mark Phelan: 313-222-6731 or mmphelan@freepress.com. Follow him on Twitter @mark_phelan.

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