Every driver knows how car insurance works. Whenever you get a new vehicle, you need to have it insured to legally drive it on the road in 49 of the 50 states (New Hampshire is the exception). Insurance prices vary depending on where you live.
Though many insurance companies offer different rates depending on the vehicle, there are some cars out there that companies won’t consider insuring because of their value. The cost of some vehicles is so high that if they are in a crash, the repair prices are higher than some insurance companies are willing to cover. So when a car has a price of $1 million or more, how does the owner get insurance?
How Does Car Insurance Work?
You shouldn’t be driving without insurance. It’s a security blanket for drivers in case they damage a vehicle in a collision. The insurance company will make sure damages are paid for without the driver having to pay out-of-pocket, excluding deductibles they may have to meet, depending on the policy. An average-price vehicle is simple to insure, but exotic cars can be a bit more challenging.
How Is Exotic Car Insurance Different From Regular Insurance?
For the average car buyer, insurance premiums will be based on a few factors such as driving record, geographical location, age of the driver and price of the car. The policies from most insurers can cover a majority of the vehicles on the road.
For exotic cars that have six-figure price tags, insurance companies that are willing to work with these vehicles will tell the owner at what price they value the car and set the premium based on that number. For cars that cost up to $1 million or more, things are a bit more complex. Though many regular insurance companies don’t specialize in these types of vehicles, owners may have to look elsewhere at companies such as Hagerty or Chubb for insurance.
What Do the Insurance Companies Have to Say?
Brian Rabold, vice president of automotive intelligence at Hagerty, tells the Detroit Free Press in an interview about how million-dollar cars get insured. The Free Press is part of the USA TODAY Network.
“We have what we call an agreed-value policy. Hagerty is watching the market, collecting all the data we can on these types of cars and then determining what the value is,” Rabold said. “We produce a price guide, we publish those values online, so we’ll sit down and we’ll talk with that client and set that level, and then we agree that’s the covered amount.”
Abe Barnett, vice president of global collections at Hagerty, said there are additional factors to be considered.
“When looking at insuring a hypercar, we consider factors including where the vehicle is stored, its intended use, expected mileage and even whether it is part of a collection, as many of our members have multiple vehicles that reflect their incredible passion. Driver experience can also play a factor. Having prior ownership and hands-on experience with that kind of performance is a huge plus.”
Pinning down an average price for premiums is tricky because of the various factors, but one thing is clear: Premiums will be much, much higher for super-expensive cars.
How Do High-End Car Companies Feel About the Insurance Process?
The automakers that sell these extremely high-cost vehicles view insuring them as a simple process, similar to insuring other high-end assets like a luxury home, private jet or yacht. Sascha Doering, chief operating officer of Bugatti of the Americas, tells the Free Press in an interview how their wealthy clientele go about insuring these types of cars.
“Usually, they are very high net worth individuals that insure very high valued assets quite frequently. They work with their individual insurance partners in order to make it work. They’ve always been quite smart about it.”
Keenan Thompson is a car culture reporter for the Detroit Free Press. Contact Keenan at [email protected]. Follow him on Instagram at @keenanautos. To sign up for our autos newsletter. Become a subscriber.
This article originally appeared on Detroit Free Press: Can you get insurance on a $1M car? Here’s how it’s done
Reporting by Keenan Thompson, Detroit Free Press / Detroit Free Press
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