Exotic cars can certainly be expensive, but paying to insure one should not break the bank. (No, your 1999 Toyota Corolla that you had painted fire-engine red with a yellow racing stripe on the side is not exotic, though it might qualify as unique.) If you paid less than $100,000 for your car, it is not a luxury or exotic car as per the standards of most insurers.
If your car falls into this category though, and you'd like to protect your investment, there are a few factors to think about as you shop for insurance that may differ from the norm.
What Makes a Car "Exotic?"
The main factor that makes a car exotic rather than simply being nice or high-end is the brand. Makes and models that have this reputation tend to use high quality materials, and include many luxury features. Image is a factor as well. Brands that fall into the "exotic" class are associated with opulence and performance, more than with being a sturdy car for a family of five.
As great as a camper van or family sedan may be, in this instance we're talking Ferraris and McLarens, not Toyotas and Fords. Purchase price aside, these cars often cost a lot of money to maintain as well. Upkeep on an exotic car may require niche knowledge, specialty tools, and custom parts. These factors combined make exotic cars quite costly to own.
How Does Exotic Car Insurance Differ?
If you’ve ever bought a standard non-exotic car, you know that the second you drive it off the lot, it loses value. This isn't the case with exotic cars, many of which appreciate—rather than depreciate—over time. As such, exotic car insurance is a different market entirely. Chances are you won't have much luck finding what you need if you call a standard auto insurance company and ask them to insure your Ferrari.
The manner in which exotic cars are used differs from that of standard cars as well. They are most often kept in a garage and out of harm's way, rather than on the street. Some people may not even drive their exotic cars at all, and are simply looking to collect. This fact alone changes the risk calculus.
Because exotic cars are all unique and expensive, the cost to insure them will be tailored to the driver's habits and car’s needs, rather than by the standards set by the state.
Where Can I Find Exotic Car Insurance?
Your best bet to insure your exotic car is to look for a company that specializes in your make and model, and has a solid reputation. This may not be the kind of research you can do just by searching online for “exotic car insurance” plus the name of your state.
Your best bet is to speak to the experts. Exotic car dealerships, people who own such cars, or even members of car clubs may be able to share inside knowledge that you won't find online.
How Can I Choose the Right Company?
There are a few ways to check that a company is high quality, and a few red flags to look out for as well. If you find a company with a lot of stock photos, and can’t find a profile on the Better Business Bureau’s website, you should be skeptical. This is where online research comes in handy. Search for client reviews before you act on expert advice to make sure that you’re not having a fast one pulled over on you. Reputation matters a lot, and you should be able to get a good sense of a company's quality by reading about how their clients and former clients rate them.
As you research, keep in mind that many online reviews are paid for, and many will be from angry people whose issues with a product or service may not relate to your needs at all. Always read third party reviews with a grain of salt.
How Are Exotic Cars Valued?
There are two main methods used to assess a car's value: the agreed value and stated value. The agreed value is often determined by an expert who conducts an appraisal and a thorough analysis of photos and specifications. The stated value is simply the actual cash value of the car, which can be much less. In most cases, you’ll want an agreed value policy.
What Should I Do Before I Purchase a Policy?
Once you've done your research and chosen a solid company to work with, there are a few things you should do before you meet with an agent and sign the dotted line.
- Document its state: Take photos of your car. You should capture the engine, interior and exterior. This will be helpful when it's time to set the agreed value with your insurance company.
- Get an appraisal: This step is a must. If you have done any extra work on your car, but you only know the sticker price, you may be out of luck if it is damaged or stolen. Your insurer won’t pay for the upgrade if you have a stated value rather than an agreed value policy. Make sure this appraisal notes the agreed value.
- Read the fine print: Know what you can and can’t do in order to comply with your end of the contract. If you can’t drive more than a certain number of miles each year, don’t risk it, or your coverage may be voided. If you are the only person allowed to drive your car, or the only one who is covered in case of an accident, don't take any chances by letting a friend take it for a spin. This also goes for any limits as to where you can drive your car as well. Some policies exclude rough terrain or other places that make your car prone to damage.
- Don't sleep on it: Assess your exotic car and update the agreed value each year. Every time you add extra features, or do work or keep an exotic car fresh and clean, it should go up in value, and your insurance policy should reflect that.
How Much Will it Cost to Insure My Exotic Car?
The cost of exotic car insurance depends on many factors. For example, the 2019 Ferrari Portofino Convertible would cost you $2,785 every six months to insure, on average, though this figure will vary by state and driver, among other factors. For some owners, this may seem high, but for some, when you compare it to the $279,575 sticker price, it's just a drop in the bucket.
How Can I Save Money on Exotic Car Insurance?
As with any type of car insurance, you do have some effect on your rates, and there are actions you can take to save money each month or year. The way your rates are set will vary, but you may be able to save money by being a safe driver, dropping extra coverage (though that may pose more risk with an exotic car than a standard car), looking for a policy that sets limits on the amount of miles you can drive each year, and keeping extra drivers off your policy.