Full Coverage Insurance for Your Luxury Car

Even though shopping for a luxury car can be exciting, it still takes careful research and lots of thoughtful planning. Whether you decide to customize your new luxury vehicle with exotic wood, premium leather, or a 6.0L V12 Turbo engine, once you buy your dream machine, finding the right kind of insurance policy will be the next challenge you will need to tackle.

Getting insurance for a luxury vehicle can be as easy as it would be for any standard car, but it comes with higher risks. As such, there are many factors you should consider first. 

Navigating the Auto Insurance Maze

Owning a luxury vehicle is an expensive yet exciting investment. Figuring out coverage for your new asset should not add stress. Since Luxury vehicles are so unique, it's easy to get overwhelmed by all the information, carriers, and plans. Understanding your car and how insurance rates are affected by your asset are the first steps to simplifying the process.  

Keep in mind that getting quotes from multiple insurance carriers is the best way to ensure a competitive rate. First and foremost, full coverage auto insurance is always recommended when such an expensive investment is at stake. In addition, if you still owe payments on your luxury vehicle, your lender will almost always require full coverage. 

Going beyond the basics and learning about added protection options and limits will ensure you have the coverage you need in the event of an accident. 

How Does the Type of Luxury Car You Own Affect Insurance? 

A luxury vehicle has higher quality, performance, comfort, and amenities than a standard vehicle. Sports cars and exotic cars are both types of luxury vehicles based on their design and manufacturing costs, materials used, and limited production value. 

Exotic Cars

An exotic car is essentially a luxury sports vehicle, sometimes called a "super-sports car." A sports car is usually smaller and has less weight than a standard vehicle. They are typically two-seaters with softbacks and engines built for speed and racing. Not all sports cars are exotic. For a sports car to be exotic, it must have extremely specific features and is a limited edition, exclusive, or customized car. 

Exotic cars are usually more expensive than standard luxury vehicles and thus, have higher premiums. Most insurance carriers will classify your luxury vehicle as an exotic car based on:

• Make/model
• horsepower 
• number of cylinders
• size 
• weight

An example of a luxury car is a Mercedes-Benz S-Class with a base price of $95,245. An example of an exotic car is the Ferrari Enzo, with a base price of $659,330. You can see the difference! Insuring an exotic vehicle will cost you a lot more than a standard luxury car.

How Much Does Full Coverage Insurance Cost for a Luxury Vehicle?

Considering the high asset risk of purchasing a luxury car, full coverage insurance is always recommended. 

Another reason doing your research is so important. According to a recent study, the average yearly expense for insuring standard luxury cars ranges between $3000 to $4000. If you think that's expensive, exotic car insurance is even higher, ranging from $4000 to $20,000 per year! Why so high? Less competition for lower rates. Not all carriers will insure a Ferrari or Lamborghini.

Factors that Influence Rates

Although the type of luxury vehicle is going to impact your overall insurance rate, other factors will affect your speed as well:

Horsepower - More horsepower means a greater likelihood of speeding, leading to a higher risk of an accident and significant damage claims for insurance companies. 

Appreciation - The higher the value of the vehicle, the higher your premiums will be. The value of an exotic or luxury car usually goes up with time because of its limited edition or unique qualities, resulting in more costly insurance.  

How often you use it - If you drive your sports car less than 5,000 miles a year, you'll usually pay less for insurance than if you were commuting to and from work with it.

Repairs/Maintenance - Specialty cars equal specialty parts. Most parts for a luxury vehicle, especially exotic cars, will have to be ordered and likely imported, which costs more money. It will also make more money to repair once you find a mechanic with the skills to fix it. 

Driver's psychology - Believe it or not, insurance companies have characterized high-risk groups based on claim data. They use this information to determine which demographics are more likely to take risks. They consider this when issuing quotes. 

Crime/Theft – Unfortunately, theft is expected in the world of luxury vehicles, and insurance companies monitor this data too. Increased likelihood of theft equals, you guessed it, higher premiums! Exotic cars are easier to break into as well due to their compact nature. 

Safety Features - Advanced safety features aren't typically predominant in sports cars, primarily because of their compact size and weight. This is especially true in older models. Less safety means a higher risk for injury claims. 

Tips to Keep Your Rates Low

Even though there seem to be many factors outside of your control with having higher insurance rates for your luxury vehicle, there are still actions you can take to keep your rates as low as possible:

Being a responsible driver - Having few or no traffic violations can keep your rates competitive.  

Having good credit history – Paying your premium on time and your other financial obligations will decrease your rate.

Installing an Anti-theft System - An anti-theft system can thwart thieves and improve safety while qualifying you for potential discounts. 

Adding Advanced Safety Features – Enhancing the safety of your vehicle can also qualify you for savings if the insurance carriers believe it will decrease the likelihood of damage and injury claims. 

Bundles and Discounts – When you bundle all your insurance plans with one carrier, they will always reward you with a discount. Combine this with other discounts offered by your carrier, and you could dramatically lower your overall premium. 

Types of Car Insurance Coverage for Luxury Vehicles 

Luxury and exotic cars have different insurance needs and considerations than a standard car. Because of their expensive nature, knowing what coverage options to consider for protecting your luxury vehicle is vital. 

Liability – Whether you own an exotic car or a standard luxury car, you must maintain your state's minimum liability limits. Liability insurance only kicks in when you are responsible for an accident. If you want higher liability limits, you can always investigate an umbrella policy, increasing your coverage. This is a good idea if you have an expensive asset, such as a luxury vehicle. 

Collision And Comprehensive Insurance – Collision and comprehensive coverage is the typical combination that makes up a full-coverage plan. Complete coverage is essential for your luxury car. This will protect you and your vehicle from any damage or personal injury claims in the event of a collision or natural disaster. Full coverage insurance covers all the costs up to your policy limit, regardless of who or what caused the damage. 

Personal Insurance Protection – Also known as PIP, this covers any medical expenses for you and your passengers in the event of an accident. Since luxury and exotic vehicles have more horsepower and speed, they are more likely to cause significant injuries or damage. PIP is a peace of mind investment for all luxury vehicle owners. 

Gap Coverage - If you are still making payments or leasing your vehicle, you should consider gap coverage. This type of coverage covers the gap between what you owe and the value of your car if your car is stolen or totaled. If you have a vehicle valued at $200,000 but still owe $150,000, this could come in handy!

Added Protection for Exotic Vehicles. 

Since exotic vehicles have higher horsepower and speed, you may need to get added protection from a specialty insurance carrier. These added protection plans include:

Agreed value coverage allows you and your insurance carriers to decide on the value of your vehicle. If the car is damaged or totaled, the carrier will pay up to the agreed value. 

Automobilia coverage – Many luxury vehicle owners are also car collectors. If you own any valuable collectibles from the manufacturer along with your exotic vehicle, some specialty car insurance companies offer coverage for these collectibles. This includes your license plates, ornaments, displays, and other automobilia!

Tool coverage - If you have special tools for maintenance on your exotic car, these tools can be covered under your policy with select carriers. This can include coverage for tools, accessories, storage, and toolboxes. Getting these tools covered through your auto policy versus your home insurance is a great way to save since auto policies' deductibles are typically lower. 

Luxury Car Insurance Carrier Comparison

Whether you go with a standard insurance carrier or a carrier specializing in insuring luxury, classic, or collector cars, there are many options available! These are a great starting point when you are ready to compare quotes! Below is a list of 10 of the most notable carriers that offer insurance plans for luxury vehicles. 

• AAA
• Progressive
• Safeco
• Travelers
• Nationwide
• State Farm
• Allstate
• Geico
• Hagerty
• American Collectors