Do You Need Special Coverage for a High-End or Luxury Vehicle?
Last Updated on October 24, 2022
If you have a high-end or luxury vehicle, then it makes sense you have different insurance requirements than someone with a cheaper car.
Sometimes, people with high-end or luxury vehicles can get adequate coverage with a normal insurance policy. In other cases, you’re better off buying specialized high-end vehicle insurance.
Luxury vehicles have high costs and high performance. Your insurance policy might have similar coverage options – like liability, collision, and comprehensive coverage. However, it may have higher limits, wider coverage, and other unique options.
The high price and uniqueness of a luxury vehicle can make it a target for theft. High-end vehicles are more expensive to repair. High-speed vehicles may also have higher insurance costs because they’re statistically more likely to be involved in accidents.
Today, we’re explaining everything you need to know about special coverage for high-end and luxury vehicles, including unique insurance options available today.
What Types of Coverage Should You Have on a Luxury Car?
Luxury cars should have similar coverage options to ordinary vehicles, including:
- Liability insurance
- Collision insurance
- Comprehensive insurance
- Personal injury protection
- Medical payments insurance
- Uninsured or underinsured driver’s insurance
- Gap coverage
- New car replacement insurance
All of these coverages can be found in ordinary auto insurance policies. Most states require you to have liability insurance, while some states also require medical payments insurance or personal injury protection. Several states also require uninsured or underinsured driver insurance.
Collision insurance, comprehensive insurance, and gap insurance are optional in all states. Collision insurance covers damage to your own vehicle after a collision. Comprehensive insurance covers theft, vandalism, environmental damage, and other non-accident-related damage. And gap insurance covers the full amount owed on your new vehicle – not just its actual cash value.
Although luxury cars may have the same type of insurance as ordinary vehicles, they have different levels of insurance. Someone with a high-end vehicle may require much higher liability limits, for example, than someone with a cheaper vehicle.
Experts recommend buying enough liability insurance to cover your at-risk assets. That means your liability insurance should cover the value of anything you stand to lose if you are held liable for damages. Liability insurance covers medical bills and other expenses you inflict upon other people after a car accident if you are proven to be at fault.
Typically, drivers have anywhere from $250,000 to $2 million of liability insurance coverage. Insurers have different maximum levels of car insurance coverage in different states. Allstate has a maximum liability limit in New York of $250,000 per person and $500,000 per accident for bodily injury liability, for example.
Because of these limits, some high-end vehicle owners purchase umbrella coverage, which extends liability beyond these maximum limits. Umbrella coverage can extend your liability by over $1 million, for example. You can purchase as much liability insurance as you need to cover your assets.
High-end luxury vehicle owners generally want collision and comprehensive coverage – even though they’re optional in all states. These coverages compensate you for the value of your own vehicle. If you cause an accident and do not have collision coverage, then you will need to pay to repair your vehicle out of pocket. On a high-end vehicle, that could be a costly repair bill.
Collision insurance also covers the value of your vehicle if it’s declared a total loss (i.e., totaled). If your car is in a serious accident and is declared a total loss, then you will receive compensation for the actual cash value of the vehicle. Without comprehensive insurance, you will not receive any compensation after a total loss.
Comprehensive insurance covers damage to your high-end vehicle that occurs outside of accidents. It covers theft, vandalism, hail damage, and fire damage, for example.
Generally, it’s a good idea to have comprehensive coverage on a high-end luxury vehicle. Without comprehensive insurance, you will not receive compensation if your vehicle is stolen or burns down in a house fire, for example.
Personal Injury Protection & Medical Payments Coverage
Personal Injury Protection (PIP) coverage is required in some states but not others. It covers the medical bills of you and your passengers after an accident. It can also cover lost wages and other expenses. Medical payments coverage (MedPay) works similarly to health insurance, covering medical bills and other expenses after an accident but not lost wages.
Gap & New Car Replacement Insurance
Gap insurance covers the gap between the value of your vehicle and the actual cash value of your vehicle. On high-end or luxury vehicles, this can be a huge gap.
Let’s say you have purchased a high-end vehicle for $125,000. You crash the vehicle three months after purchase. The vehicle has an actual cash value of just $85,000 because it’s a used high-end vehicle. However, you still owe roughly $125,000 on the vehicle. There’s a “gap” between the actual cash value (the amount you receive from your insurance company) and the amount you owe for that vehicle.
New car replacement coverage works similarly, and it’s popular for new high-end vehicles. It covers the cost of buying a replacement car (of the same make and model) if you total your vehicle. Without new car replacement coverage, your insurance would not provide enough compensation to buy a new, similar vehicle after an accident.
How Much Does High-End Luxury Vehicle Insurance Cost?
High-end luxury vehicle insurance costs significantly more than standard car insurance. However, you may be surprised by how “affordable” luxury vehicle insurance can be. The cost of insurance does not always increase linearly with the value of your vehicle.
The average cost of full coverage car insurance on a standard vehicle in the United States is around $1,400 per year.
For a higher-end vehicle worth between $80,000 and $100,000, you can expect to pay $4,500 to $6,000 per year for car insurance.
Luxury Car Insurance Discounts
Just because you have a luxury vehicle doesn’t mean you have to pay high rates for car insurance. You can take advantage of luxury car insurance discounts to save hundreds – or even thousands – per year.
Luxury car insurance discounts available include:
Multi-Line Discounts: Multi-line discounts let you save money when bundling multiple lines of insurance. If you have life, auto, and homeowners insurance through a single company, for example, then you may qualify for a discount.
Reducing Coverage: If you have a luxury car but don’t want to pay exorbitant insurance rates, then you can drop coverage. Dropping coverage can save you thousands of dollars per year, although you have more risk.
Agreed Value or Stated Value Policies: On classic cars and premium vehicles, consider a stated value or agreed value policy. Under this policy, your insurer agrees to cover a specific value of your vehicle. In the event of a loss, your insurer must cover this amount. It’s popular for high-end vehicles, classic cars, and other luxury vehicles.
Standard Car Insurance Discounts: Luxury car insurance policies have many of the same discounts as ordinary car insurance policies, including safe driving discounts, defensive driver education discounts, good student discounts, safety equipment discounts, and more.
How Exotic Car Insurance Works
Your vehicle may be more than just a high-end or luxury vehicle: it may qualify for exotic car insurance.
Exotic car insurance is for the rarest and highest-value luxury vehicles. These vehicles are very risky for insurers to insure. They have a high risk of theft. They have extremely high repair costs. In an accident, they can cause significant damage to the drivers, passengers, and others.
If your car meets the following requirements, then you may qualify for exotic car insurance:
- Worth over $100,000 or more than 25 years old
- Good condition
- Not a regular-use vehicle
- Stored in a locked garage when not in use
Qualification rules vary between insurers. Some insurers accept any vehicle over $80,000 for exotic car insurance, while other insurers accept vehicles more than 30 years old.
Most insurers also require you to have a good driving record to qualify for exotic car insurance.
Final Word on Insurance for High-End Vehicles
High-end and luxury vehicles have similar insurance requirements to standard vehicles – but with higher limits and premiums.
High-end and luxury vehicles are more expensive to repair and insure. They have a higher risk of theft and serious accidents. Fortunately, by taking advantage of high-end car insurance discounts, you can pay competitive rates on all types of car insurance.