Exotic Car Insurance – Everything You Need To Know

exotic and supercar insurance

Exotic Car Insurance – Everything You Need To Know

Let’s talk about supercar insurance. It’s one of the biggest expenses you pay for owning an exotic vehicle and it’s absolutely unavoidable.

There’s at least a minimum amount of 3rd party insurance you need to pay in order to legally drive your supercar or any car practically everywhere in the world. And while collision coverage and comprehensive coverage is optional, you really won’t skip on it. Not on your supercar anyway.

Make no mistake, insuring an exotic car is certainly expensive. Expect to pay several thousand dollars per year to insure most production supercar models. However, compared to their several hundred thousand dollar cost, is it really significant?

How about getting your McLaren 720S totalled, or your Ferrari 812 Superfast stolen? These cars cost $300,000 for the base model, and most roll out of the factory heavily optioned. You either can’t afford to lose so much money on a random event, or you’re smart enough to recognise that you shouldn’t.

In this article, we’ll cover everything you need to know about exotic car insurance and how to get the best insurance coverage and price for your supercar.

But before that, let’s address the burning question.

How much does it cost to insure a supercar?

Unfortunately, there’s no definitive answer. Insurance, no matter what the asset, is highly individual. Every insurer uses proprietary software to analyze dozens of variables and factors of different weight to determine the exact cost to repair or replace a given vehicle and the risk its driver carries. The equation then spits out an insurance price for each specific car.

No two policies are the same. For normal production cars, which are sold in the tens or even hundreds of thousands per year, there’s enough data to calculate accurate ballpark figures.

Supercars are far more rare, making the statistics less reliable. Manufacturers like Ferrari, Lamborghini and McLaren sell just a few thousand cars across their entire model line up per year. Hypercar brands like Bugatti, Koenigsegg and Pagani only produce a few hundred units out of each particular model ever.

The people who buy these cars are wealthy, but highly diverse. Therefore it’s impossible to provide an accurate price on their insurance policies.

Insurance rates swing in a broad range – from $1,500 to $35,000 per year and a lot more for hypercars. That’s not really helpful if you’re budgeting for your new supercar. So, we dug out a few specific examples of what people actually pay.

Let’s look at them below.

Lamborghini insurance

Annual Lamborghini insurance prices average around $6,000 and $7,500, according to 4 Auto Insurance. That said, there are a vast majority of cases falling below or above the mark.

On the lower end of the spectrum, there’s James the Stradman.

He’s got a healthy collection of supercars, including two Lamborghinis. His 2006 Lamborghini Gallardo cost him $110,000 to obtain and $148.67 per month or 1,784.04 per year to insure. The insurance premium on his 2012 Aventador is a whopping $343.69 per month or $4,124.32 per year. That car cost him $240,105.

To put it in perspective, there’s full coverage on both cars. Jason is 29 years old. He doesn’t own a home, he’s not married and has no children. However, his driving record is very clean, he owns multiple cars on the same insurance policy that costs 11 thousand dollars per year and has a fairly good credit rating.

On the other end of the scale, there’s Hayden Bowles – a young Internet entrepreneur. He got to purchase a heavily-modified 2015 Lamborghini Huracan at just 18 years old. The cheapest insurance he could get in Arizona was…get ready for it…$2,700 per month or $32,400 per year. And, there were only two insurers willing to extend coverage to him. He paid for both with his own money.

Ferrari insurance

A six month insurance policy on a Ferrari supercar will cost you on average $8,000 through a traditional company and around $3,000 through a specialty insurance agency, according to ValuePenguin. Estimates average around $10,000 per year.

Mike from Auto Vlog pays $134 per month or $1,608 annually for insuring his Ferrari F12 Berlinetta in Minnesota, which is a surprisingly good deal for a high performance car like that. He paid $255,000 for the car. The F12 is on an insurance policy with three other cars and he has a good history.

Chris Graham pays $4,560 annually to insure his Ferrari California. The car is loaded with 50 grand worth of options and a sticker price of $248,000. He owns other cars, a boat and a house with his wife and they both operate successful businesses.

McLaren insurance

James the Stradman is paying $2,612 for full coverage insurance on his McLaren 570S.

Ricky Gutierrez was able to get an insurance policy for his 2018 McLaren 720S at just $235 per month or $2,820 per year. The car itself is a Launch Edition that cost an eye-watering $299,000.

The McLaren is insured under a group policy with just 1,000 – 2,000 miles per year. Ricky’s got a group policy with a Lamborghini and a Maserati Ghibli assigned as his daily driver. There’s a relatively high deductible at $2,000. He has a clean driving history and excellent credit record that further reduces the premium.

That’s definitely not the case with every McLaren out there. Sergio Rodriguez is paying $600 per month or $7,200 per year to insure his 2015 McLaren 650S Spider that cost “only” $130,000. The catch here is, the car will be rented out through his exotic car rental company. It will be driven (supposedly hard) by all sorts of random people, so that drives the risk way up.

Aston Martin insurance

Average insurance prices for Aston Martin vehicles range between $381 for the Vantage V8 to $652 for the DB11, according to Finder.com. That gives out annual costs between $4,500 to $7,800 for an 2018 model in Pennsylvania, driving 10,000+ miles per year.

Carsurer estimates a 2017 Aston Martin V12 Vantage costs between $2,000 and $4,300 per year to ensure, the average being $225 per month or $2,700 per year.

Steve McEvoy was able to secure an annual premium of $2,000 for his 2005 Aston Martin DB9. He bought the car used with 15k miles for $69,500 in 2013. He’s a 50+ years old driver with more than two decades of spotless driving. The DB9 benefits from several multi-car and homeowner discounts.

Audi R8 insurance

TrustedChoice estimates an Audi R8 costs an average of $2,584 to insure with full coverage. 4 Auto Insurance estimates an almost identical price at $2,488 per year for full coverage.

James the Stradman (..yes, it’s the same guy. He’s got some garage, right?)  insured his 2009 Audi R8 for $1,778 per year. The car cost him $60,000 – almost half his Gallardo, but costing practically the same to insure.

Ford GT insurance

Doug DeMuro was able to secure a comprehensive insurance policy for his 2005 Ford GT for just $934 for six months, or $1,868 per year. He bought it for more than $200,000.

The second generation Ford GT, which costs up to $500,000, can be insured $2,000 to $3,000 per year on average, according to Smart Financial.

What do all these examples have in common?

As you see, the majority of these YouTubers are actually getting fairly good deals on their insurance policies. Their insurance rates are roughly 0.6% to 3% of the purchase price of the vehicle.

And no, there are no YouTube channel discounts, as far as we’re aware. However, all of these people are savvy buyers. They shop around and look for the best possible insurance deals they can get.

They leverage their great driving record and credit history to lower the risk and secure better premiums. Most of them have other cars and high-value assets insured under the same umbrella policy, which adds further discounts to each individual vehicle.

Most importantly, their supercars are not their daily driver cars. Most of them are insured with limited mileage and other attached rules and limits. All these factors make a significant difference on the final price.

What factors impact your supercar insurance price?

In order to shop around and get the best possible rate on your supercar insurance, you need to understand how insurance works and what variables drive insurance prices up and down.

Let’s start with price.

How is your supercar valued?

Obviously, insurance for supercars is expensive because the cars themselves cost more than $100,000. Some cost more than $500,000. And hypercars? There’s not really a limit on their price.

To maintain and repair such high-value cars is equally expensive. They require special tools and original parts which cost hundreds if not thousands. Technicians need to go through special factory training for each new model and their time is not cheap.

The first and most important task when insuring your supercar is to make sure you and the insurance company agree on what its value actually is. The insurance company will ALWAYS seek ways to reduce the value of your car and limit the price they pay if the vehicle is totaled in an accident.

Agreed value

An agreed value is simply that – you and the insurer agreeing on a specific number the vehicle is worth. This is frequently applied in specialty insurance policies for exotics, collector cars and classics as their value evolves differently over time compared to normal cars.

Actual cash value

Actual cash value or true market value is the amount of money the car will realistically sell for at the market today, given it’s model, age, depreciation, options, condition, and local demand. This value is calculated by the insurance company through their own proprietary methodology not disclosed to their customers.

Cost to replace

Cost to replace is the actual money you need to get a similar or at least comparable vehicle, if your own is damaged beyond repair.

In the majority of cases, the actual cash value determined by the insurance company is significantly lower than the cost to replace the vehicle. To avoid tension and disputes in the event the car is scrapped, stay vigilant and double check what value you’re insuring for, and if you’re getting the right coverage.

Types of coverage

Insurance adds protection against an unexpected and unwanted event that causes harm or material damage of any kind. You can insure against different categories of harmful events. In the context of supercars, we’re always considering full coverage just because the cost to repair or replace them is astronomical.

That said you need to know what the individual components are, so you can make sure they are added to your policy and their payout limit is appropriate for the cost of your supercar.

  • Liability coverage – This insurance is legally required coverage in most states. Liability coverage compensates any property and material damage as well as bodily injury you cause to other people while driving.
  • Medical bill coverage – If you or your passengers get injured in a car accident, medical coverage will pay for the cost of healthcare services, surgery, X-rays, and other hospital expenses. Medical coverage is legally required in some states.
  • Collision coverage – This coverage will pay for repair or replacement for your vehicle if it got damaged in an accident regardless of the cause. Collision coverage is typically optional, but may be required if you finance or lease your vehicle. On a supercar, it’s practically mandatory.
  • Comprehensive coverage – If your car is damaged by literally any random event – natural disaster, fire, vandalism, theft, etc – a comprehensive policy will cover the damage or cost to replace.
    Comprehensive coverage comes with an agreed deductible – a minimum price the car owner must pay towards any repair or replacement expense, before the insurance company takes over and covers the rest of the cost. The bigger the deductible the cheaper the premium. There are $0 deductible plans, however, they are the most expensive ones.
    Just like collision coverage, this one is optional but practically mandatory for a supercar.
  • Personal injury protection – This policy is not available in all states. Where it is, PIP covers for all damages and material loss you’ve sustained as a result of a car accident. This includes medical and hospital bills, but also child care, loss of income and other personal expenses.
  • Uninsured motorists coverage – Liability coverage is mandatory by law, but what if somebody breaks the law, drives uninsured and causes an accident on the road? This coverage is insurance against uninsured or underinsured motorists.

Each of these comes with a specific payout limit – be it $100,000, $500,000, or even unlimited coverage. You must make sure the payout limit on each coverage is appropriate for the cost of your supercar and cost of medical services in your area.

There are also specialized coverage policies which apply for specific cases:

  • New car replacement coverage – Applied for 3-year-old cars or newer, where depreciation will make a huge difference between the actual cash value and the cost to replace.
  • GAP coverage – Compensation in events you’re upside down on value – you owe more for the car than it’s worth on the market.
  • Classic / collectible car coverage – For classic or collectible cars whose value and repair costs differ significantly from the market.
  • Ride-share coverage – If you’re driving your car for commercial purposes – Uber, Lyft or similar services.

Keep in mind, neither of these will cover your supercar against maintenance and consumable costs, wear and tear, and sudden breakdowns. That’s what warranties are for and they come with their own separate price.

Likewise, insurance in itself will not cover towing expenses and roadside assistance. These options are frequently bundled together with your insurance policy for “free”, but not automatically covered. So check if you’re getting them as part of your plan.

How do insurance companies assess risk?

The final component of insurance pricing and often the most difficult to comprehend is risk.

Obviously, since we’re talking about supercars, the risk is always higher due to the sheer potential for speed and performance these vehicles have. We’re talking 0 to 60 mph acceleration in 3 seconds, sometimes less, cornering forces well beyond 1G and 200+ mph top speed.

Of course, they also come with state of the art safety features which limit the loss of life and heavy injuries. However, the amount of material damage supercars can cause, when not properly handled, is absurd.

The main job of insurance companies is calculating the chances of this happening. They spend the majority of their resources to develop a proprietary system for profiling. That is collecting an exorbitant amount of personal data and analyzing it to determine the risk carried by each individual driver and how different factors influence the likelihood of them taking part in an accident.

  • Driving record – Obviously, if you have reported crashes, auto incidents or speeding tickets, your insurance costs will rise exponentially.
  • Age – The younger you are, the more spontaneous, aggressive and reckless your behaviour on the road is on average.
  • Insurance history – Do you have other insured assets? Have you made any insurance claims in the past? If so, how much did it cost the insurer? These answers give insight into how the theoretical calculated risk compares to your actual real world performance. Obviously, if you made any claims, the price will go exponentially up.
  • Ownership history – The more successful history you have owning supercars, the more confident the insurance company will be you can handle them well.
  • Home ownership – If you own a home or other high valued assets, this will give the insurance company insight into how you care and manage your property. Usually this drives the risk down.
  • Gender, Education, Marriage, Profession – By analyzing crash reports for these and more personal traits, insurance companies are able to fine tune the perceived risk you carry as a driver and adjust your price accordingly.
  • Geographic location and local prices – Traffic conditions, infrastructure quality and population are all factors which influence road safety for a given area. Therefore different geographic locations are priced differently.

Each of these risk factors and probably dozens more is assigned a specific weight by the insurance company. The exact equation used to calculate the final price is proprietary and even most of their own employees do not have access to it.

Insurance companies have become so good in profiling, it’s safe to assume they  know more about you than you do.

Which insurance companies will insure an exotic car?

The final point we need to talk about is availability. Usually there are dozens of insurance companies competing to underwrite your policy. However, when it comes to supercars, suddenly there’s nobody in town.

The fact of the matter is, auto insurance companies may not even want to insure your supercar at all. If your car is too expensive, or your profile carries too much risk, or both, they may simply deny to extend a policy for your supercar.

That said, the insurance agencies listed below are known to extend insurance policies on exotic vehicles.

  • Allstate
  • Progressive
  • State Farm
  • Liberty Mutual
  • Farmers Insurance

Regular vs specialty insurance companies

Many insurance companies do not offer payout amounts large enough to compensate a second-generation Ford GT, worth half a million, or a Ferrari SF90 Stradale that’s even more expensive. What’s to say about multi-million-dollar hypercars like anything from Koenigsegg, Pagani, Bugatti , Aston Martin Vulcan and other flagship offerings?

Anytime you’re in the market for a new supercar, you should consider specialty insurance companies. These are a subset of the market that focuses on exotic, classic and collector cars, whose prices and values are entirely different from the rest of the industry.

Some examples of popular specialty insurance companies:

  • Hagerty
  • Grundy Insurance
  • PURE Insurance

Usually, these companies will be more willing to insure your supercars and may over significantly reduce premiums. However, you and your supercar will be subjected to a lot of scrutiny and will need to accept significant rules and limitations to how you use your vehicle, such as:

  • Be over 25 years old
  • Own a supercar of certain value or age (eg. minimum cost of $100,000)
  • Store your supercar in a locked and secured garage. Equip immobilizer devices, trackers or other anti-theft equipment
  • Succumb to driving a limited amount of miles each year (eg. 3,000 or less)
  • Have another vehicle as your main means of transportation
  • Maintain your supercar in good condition and undergo routine scheduled maintenance at authorized and certified repair shops

Specialty insurance companies can be a big hassle to deal with in the event of an accident. They will be looking for every possible way to trap you with some between-the-lines policies and conditions, which annul your claim.

At the same time, they may be your only option if traditional insurance companies deny your application or offer unbearable prices.

How to choose an insurance for my supercar?

Your first start should be your current insurer. Pick up the phone and ask them whether they will insure your new super sports car. Your successful history with them should reduce some of the risk, compared to opening a fresh new account with a different insurer.

If that doesn’t work, your only option is to call a dozen or so companies and acquire all possible insurance quotes for your supercar. Obviously, you want to pay less money. However, you also want to work with an honest insurance company which won’t throw you under the bus if the car is trashed in an accident.

  • Are you getting the right coverage?
  • Does the insurance company evaluate your supercar’s price fairly?
  • Are the extra rules and conditions acceptable?

Only when all boxes are ticked, you should proceed with deeper research into the quality of their service.

Visit the forums and Facebook groups for your manufacturer and try to find experiences with the same brand or model and insurance company. Alternatively, seek other supercar owners who have dealt with that insurer and get their advice..

Dig whatever you can beforehand, so you mitigate as much of the hassle as possible and avoid losing big money if anything happens to your supercar.

If you can’t bother shopping around and dealing with the hassle of chasing insurance companies around, you should consider hiring a reputable insurance broker. They will leverage their connections, experience and deduction skills to help you balance the risk and cost of your supercar insurance. For a price.

Conclusion

The exotic car insurance industry is a hard nut to crack. Ultimately, you’ll discover that you don’t have too much of a bargaining power over insurers.

You either accept their price or not. Sometimes it’s $1,500. Sometimes, it’s $5,000 or even $50,000. It’s just part of the cost of owning that particular vehicle, and if you can’t cover it with ease, then you can’t really afford the car in the first place.

That said, while you can’t change the prices of insurance companies, you can possibly tweak your profile to earn a more favorable standing in their algorithm next time around.

Check out our other articles on supercar cost of ownership.

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