When it comes to luxury car insurance, it’s important to protect your high-end investment. Get informed about the types of coverage you should carry and how you can save money without cutting coverage.
What Are Luxury Car Insurance Costs?
Luxury vehicles face similar risks associated with more traditional vehicles. However, the risk for theft, vandalism, and expensive repairs is greater. If you file a claim, the costs associated with repairing or replacing the vehicle might be several times higher.
If you purchase an expensive vehicle, you might expect to pay higher auto insurance rates. After all, your luxury car insurance premium is basically a prepayment of any costs you might incur covering any losses. But do you know why that’s the case? There are several factors to consider:
- Per NerdWallet, expensive vehicles usually cost more to fix. Think about it: your luxury vehicle was expensive to purchase, so its parts cost more to replace.
- Possible insurance payoffs are higher for luxury vehicles. If your luxury vehicle is totaled or stolen, your carrier might have to pay more to replace or fix it.
- The vehicle’s claims history affects the rates. If your vehicle can top 150 mph, drivers might be more prone to speeding and accidents compared to more family-oriented vehicles.
According to AutoInsurance.org, luxury car insurance is about 18% higher compared to regular car insurance. To obtain affordable auto insurance on these types of vehicles, consider getting low-mileage coverage or having a higher deductible. Some insurance companies base your coverage on an agreed-upon value instead of the Kelley Blue Book Value.
With the higher premium, you might be tempted to lower your coverage limits. Before you do that, make sure you assess the risks. You’ll need to carry the minimum required liability coverage. However, if you have an expensive vehicle, liability doesn’t cover your damages. You also need to purchase comprehensive and collision coverage, which is typically called full coverage.
How Can You Save on Luxury Car Insurance?
As a luxury car owner, you might spend more on premiums to cover your vehicle from any type of risk. Before you select your insurance policy, take a look at your coverage limits that meet or exceed your expected risks. To help you save money, there are several steps you can take.
- Limit the drivers listed on the policy. If you have teenage or high-risk drivers, you might face higher costs because of their inexperience or poor driving habits. Statistically, these drivers are involved in more accidents, so having them on your policy could be a red flag.
- Change your deductible. This amount of any claimed loss is normally a predetermined amount that’s deducted from any settlement before you receive it.
- Reduce coverage. Similar to changing your deductible, you can drop all coverage except comprehensive coverage if you’re not planning to drive your luxury vehicle often. Keeping comprehensive coverage can protect your vehicle in case it occurs any non-driving-related damages.
- The Zebra says you should look for discounts. Your carrier might offer discounts to reduce premium costs, such as low-mileage discounts, installing theft deterrents, or having specific safety features. Theft deterrents include car alarms and electronic tracking devices. Many safety features, including anti-lock brakes, airbags, and traction control systems qualify for discounts. Oftentimes these features are standard on luxury vehicles.
- Speak with your provider about luxury vehicle policies. Some carriers have specific policies that cover luxury vehicles. They might offer specific coverage if you keep your vehicle in storage for part of the year. Make sure you ask about limits, terms, conditions, and deductibles.
- Be smart with claims. Although you might want to use your insurance to protect your high-end investment, think about the financial obligations of filing a claim. Most companies will charge you for any at-fault accident for the next three years. Consider the out-of-pocket costs versus how much your insurance will increase.
- Shop around. Shop around for new car insurance quotes every six months to determine if you qualify for lower rates.
What Types of Coverage Do You Need for a Luxury Car?
With so many different types of car insurance available, it’s important to know how much coverage you need for a luxury vehicle.
- Liability insurance. The typical rule with this type of insurance is to purchase enough for your assets. It covers property damage and medical expenses for others if you’re at fault. Certain insurers might have maximum liability coverage in certain states. According to ValuePenguin, in New York, Allstate’s liability limits are set at $250,000 per person and $500,000 for bodily injury per accident.
- Comprehensive and collision insurance. Both cover the damage to your luxury vehicle and are essential. Comprehensive covers damage done to your car that doesn’t involve an accident such as natural disasters and theft. Collision covers damage done to your car if it hits another car or structure.
- Personal injury protection (PIP) and medical payment coverage. If you’re involved in an accident, PIP covers medical bills for you and the passengers. Your insurer will pay no matter who is at fault. If your state or insurer does not offer PIP, opt for medical payment coverage. It’s similar to PIP but doesn’t offer payment for lost wages.
- GAP and new car replacement coverage. If you lease or finance a luxury vehicle, consider purchasing GAP insurance. This coverage protects you if you owe additional money on the vehicle than your carrier would pay to replace it if you’re involved in an accident. The insurer would pay for the vehicle’s cash value, so you might be responsible for thousands of dollars if the car depreciates. If you purchase the vehicle outright, the new car replacement policy covers the cost of buying the same model and make vehicle.
- Uninsured motorist property damage. You might already have this coverage depending on your policy and state. If not, consider adding it as it protects your vehicle if the at-fault driver doesn’t have any or enough insurance. Since a luxury vehicle is worth more than a standard one, there’s a chance the other party’s coverage could be exhausted before your vehicle is fixed.
Luxury car insurance doesn’t need to break your budget, but it remains vital in protecting your purchase. Make sure you have the best coverage available so you won’t end up paying thousands of dollars if you’re involved in an accident.
Sources:
https://www.autoinsurance.org/car-insurance-for-high-end-cars/
https://www.nerdwallet.com/article/insurance/auto-insurance-quotes-expensive-cars
https://www.thezebra.com/auto-insurance/vehicles/luxury-car-insurance-rates/
https://www.valuepenguin.com/auto-insurance/luxury-car-insurance
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