Insurance for Exotic, Super-Car and Ultra-Luxury Cars
There is a refined edge and swagger associated with the styling and detail of an exotic vehicle. Many owners and enthusiasts spare no expense to protect these investments, and that mindset should be shared in proper and appropriate insurance coverage.
Owning a high value, low production vehicle comes with responsibilities that are not often shared by other drivers, including sophisticated maintenance requirements and acute caution in all driving conditions. Just like vehicles, when it comes to insurance – you get what you pay for; here are some insurance discussion points that should be at the front of any exotic auto purchase:
Limitations with certain Insurance Carriers
- Some insurance carriers have a lack of comfort and knowledge when it comes to high-end exotics. Based upon the high replacement value, often will have coverage limits as to what they will pay in the event of a loss. Even if the insurance company initially approves a vehicle’s value, a claim could be challenging because some insurance carriers are not familiar with high value, limited production, or high-performance automobiles.
- Agreed Value – Insurance companies adjust claims through a settlement valuation process that is agreed upon by both the policy holder and the insurance company in the event of a total loss. Agreed value is perfect for high value, low mileage automobiles.
- Actual Cash Value – A standard means of determining what the insurance company owes you based upon current market value minus depreciation. This is a settlement that leaves the policy holder at the mercy of the insurance carrier’s terms on what they will pay the policy holder.
- Replacement Cost – One of the most highly regarded settlement options available. Similar to the Agreed Value offering, Replacement Cost is designed for vehicles that are new, or have been owned less than 3 years. In the event of a total loss or theft where the vehicle is unable to be returned, the policy will pay a settlement for the replacement of the vehicle, in full, without depreciation.
Parts and Equipment
- After-Market Tools & Equipment – Take inventory of your extra parts and ensure that you have coverage for items including: Performance tires, Wheels, Removable Targa or Hard-Tops, Tools and servicing equipment for use in a personal garage for the service of your insured auto.
- Media, Phones and other Personal Belongings – Items that are not permanently installed in your auto are not traditionally covered under your personal auto policy; they are typically considered ‘personal contents’ and covered under you home policy. Certain insurance carriers may offer a lower limit for contents located in your vehicle in the event of a theft or break in.
- Most insurance carriers provide an option to have full glass coverage provided for a $0 deductible. Certain autos can have windshield replacement that requires OEM parts to be shipped, and the expense can be fairly eye-opening. Ensure that you have full glass coverage to avoid this issue.
Servicing Options and Towing Coverage
- Virtually all insurance carriers offer a basic Towing Allowance or Roadside Assistance. In the event of a loss, you want to ensure that your servicing dealership or service provider gives you clear and precise servicing terms and suggestions to avoid additional damage that a traditional towing company may cause. Roadside assistance is typically afforded to help with vehicle disablement, dead batteries, empty gas tanks, flat tires and lock outs.
- It’s common for clients to purchase an exotic vehicle and title it in the name of a company or single-entity LLC or LP for tax reasons. This can cause significant coverage gaps, with the possibility of excluded coverage altogether. Depending upon the usage there are traditional insurance options available. Preferably, an insurance policy needs to be in the name of the entity holding the title to the vehicle. Most insurance companies will not insure personal vehicles in the name of a company, trust or partnership name.
- Outside of expensive and very restrictive, specialty policies virtually all insurance companies have firm exclusions for physical damage, bodily injury and personal liability – leaving the policy holder without coverage. When the auto is used for any track event, speed event, practicing or training for any timed event or concorso – there is no coverage for property damage, bodily injury or personal liability based upon policy exclusions.
- If you choose to “race” your vehicle, and you are familiar with the coverage exclusions on a traditional auto or personal liability policy, there are physical damage only policies for sporting cars, garaged at a track, that are primarily used for track events and shows. Coverage for the auto is only afforded while garaged or otherwise not in operation.
Use and Mileage Restrictions
- Most exotic auto owners keep the mileage low, and do not drive their exotics as a primary vehicle – this lowers the wear and tear, and the risk as perceived by the insurance carrier, which keeps the premium lower. Make sure that you state the approximate annual mileage that you intend to have on the auto, in order to save on costs. If auto usage exceeds the occasional weekend drive, just confirm which vehicles that you principally drive, and driving frequency on the exotic.
- Vehicles that are collected strictly for investment and auction, and otherwise rarely driven, can be insured on a specialty policy that lowers the premium based upon the lower risk of an auto accident.
Youthful Operators / Attractive Nuisance
- Teenagers love flashy, fast, expensive, forbidden-to-drive vehicles. Teens can ruin your clean insurance record and cause significant premium increases after a loss. Have a discussion with your kids, make rules and restrictions on operating certain vehicles, and try to keep them out of the driver’s seat without your permission.
- “Gifting” a vehicle to a child or household dependent also comes with some unique insuring challenges. The vehicle title should match the insured person listed on the policy.
- Many insurance companies require youthful drivers to have 5 years of driving experience or to be 25 years of age, or more, in order to have a policy written in their own name for an exotic or collector vehicle (non-primary use).
- Parents still share potential liability damages even if the auto is titled in the child or dependent’s name. Auto liability limits need to be adequate to ensure that in the event of an at-fault claim, there is adequate coverage to address damages and legal fees associated with the impending claim and lawsuit that may be brought against multiple family or household members.
Swingle, Collins & Associates specializes in insurance for exotic cars. The descriptions of coverages listed on this website are brief and subject to the provisions, limitations, and exclusions that can only be expressed in your policy and related endorsements. For additional information of how Swingle, Collins & Associates can assist in meeting your coverage needs for insurance for exotic, super-car or ultra luxury vehicles, please contact your dedicated risk manager to discuss the benefits and services of personal homeowners insurance coverage.
The information contained on this page is provided for informational and educational purposes only. It contains general information on insurance issues and may not reflect the most current developments in insurance coverage and is unlikely to apply in all factual scenarios. The information does not include all the terms, coverages, exclusions, limitations or conditions that may be contained in the actual insurance contract language. The policies themselves must be read for those details. Sample policy forms will be made available upon reasonable request.