Exotic Car Insurance – Worth the Expense?
In the United Kingdom, the insurance for a Bugatti Veyron costs nearly as much as the car itself. In Canada, only last-resort insurers will touch the car. In the United States, you have no option but to seek coverage from an insurer that specializes in exotic and/or classic cars, and even then coverage will cost about $15,000/year. While Ferrari’s are a bit more common, and therefore come with less expensive premiums, they’re still “exotic” by insurance industry definitions, and just as difficult to cover. One has to wonder, then, if insuring cars like Bugattis and Ferraris even worth the expense?
Why Insure?
Obviously if you want to drive your exotic automobile on U.S. highways or city streets, you must have at least the minimum required liability insurance that your state mandates. This ensures that if you cause an accident, the other driver will be compensated. In some states, personal injury protection and uninsured motorist coverage are also required by law.
In addition to merely being able to drive your car legally, there are three other reasons to insure that Ferrari or Bugatti with coverage beyond the minimum, they are:
1. Value: Exotic cars are the most expensive cars to insure because they are built in limited numbers with highly specialized parts. It’s easy to think that if you can afford to buy such a car, you can absorb the cost of insurance, but can you also absorb the cost of replacing your valuable investment?
2. Temptation: Exotic cars are tempting to thieves, whether they plan to just break in and take whatever valuables they can gather, or attempt to take the entire vehicle. These are high-profile vehicles with an equally high risk of attracting vandals, and re-keying one, or having that certified paint color touched up, isn’t as easy as doing the same with a garden-variety Honda or Toyota – or as inexpensive.
3. Owner Profiles: Those who have the money to spend on a limited edition Lamborghini or ultra-fast Ferrari are also likely to have high-powered attorneys on retainer, which means they’re more likely to file a claim over minor dents and scratches that drivers of Subarus, Fords, and even BMWs would likely ignore. Insurance pays for those claims – but that litigious personality also drives the cost of said insurance higher.
Why Choose Specialty Insurance?
The flippant answer is that special cars require special insurance consideration. The serious answer is much the same, but with supporting arguments. Here are three reasons to consider exotic coverage for an exotic car:
1. Multiple Vehicles: Exotic auto insurers are accustomed to dealing with automobile collectors, men and women – and even corporations – who have entire stables of cars, some of which are rare, some of which are classic, and one or two that are “normal,” for daily use. Because of this, most policies come with automatic coverage for new additions to the collections, for up to thirty days. 2. Personal Service: Unlike mainstream insurers, the customer care at most exotic insurance coverage is often concierge service, or nearly so. You will be treated like a person, not a mere account number, and you will deal with people who understand your car as well as you do, if not better.3. Agreed Value Coverage: The biggest advantage of exotic insurance is agreed value coverage. Instead of basing your coverage limits on the blue book value of a car, minus depreciation (and even that multi-million dollar Bugatti depreciates pretty quickly), your coverage will be based on a value that you and the insurance company agree on together, one that more accurately represents the real worth of your vehicle. Downside of Exotic InsuranceThere are, of course, some restrictions that come with specialty insurance, but these requirements are actually common practices for most people who own performance or exotic cars, and include:· A limitation on the number of hours per year your vehicle may be driven (most Bugattis and Ferraris just don’t see all that much road time.) · A requirement that the car is stored in a locked garage when not in use (could you imagine leaving such a car in the driveway? Or at the curb?) · The driver must have significant driving experience (usually at least ten years – as most owners of exotic cars are adults with significant wealth, this is usually a “given.”) Does all this mean it’s worth the expense to insure a Bugatti or Ferrari? The better question is: is it worth the risk not to?
