Why Do Luxury Cars Cost So Much To Insure?

Luxury cars come in all shapes and sizes. You have small hypercar coupes like the McLaren P1, larger luxury saloons like the BMW M4, and then even bigger luxury SUVs like the Lamborghini Urus. All of these cars offer totally different driving experiences, yet they have one thing in common. 

They are extremely expensive luxury vehicles. You buy them because you expect to receive a level of comfort or driving technology that’s a cut above the rest. As a result, these cars are also extremely expensive to insure. 

Why Do Luxury Cars Cost So Much To Insure?

Expensive Items Cost More to Insure

This is an obvious starting point; the more expensive something is, the more it will cost to buy insurance for it. You can look at house insurance as an example of this as well – bigger and more valuable homes will command larger home insurance premiums. 

It is a rule that exists across the board as insurance companies care about the value of things. You spent ten or twenty times more than your neighbour on this luxury car, so it stands to reason that you’ll need to pay more for the insurance. 

However, the initial cost of a luxury vehicle isn’t the only issue. Other factors come in to ramp the costs up even more. 

Luxury Cars Are Rarer Than “Normal” Cars

The more high-end a car is, the rarer it will be. Some luxury cars are made in limited quantities. For example, the stunning Mercedes AMG One was only produced 275 times. This means there are far fewer of this particular cars on the roads compared to other mass-production cars. 

When a vehicle is rare, it will cost more to insure. This is partially attributed to its value, which will likely increase with age as people struggle to get their hands on the vehicle. Nevertheless, the main issue is the ability to repair the car. Mass-production cars are easy to repair as dealers exist everywhere. If you crash your Lexus, you can take it to a local garage or an official dealer and the repairs will be done within a few days. 

Things are different with luxury cars as replacement parts are scarce. Not only that but some cars can only be repaired by licensed and approved mechanics. If you own a Ferrari, it’s incredibly unlikely that you can take it to your local garage to get fixed. You’ll probably need to phone a Ferrari dealership and get them to look at it. This means the entire repair process is way more costly. 

So, for an insurance provider, it means they’re forking out more money for any repairs to your car. As a result, they cover this by upping the premiums, making you pay more for luxury car insurance. 

Why Do Luxury Cars Cost So Much To Insure?

Accidents Are a Bigger Issue in Luxury Vehicles

Following on from the point above, accidents are a bigger problem when you drive a luxury car. As stated, any repairs or minor bumps and bruises suddenly carry larger financial repercussions. Given that most car insurance providers offer coverage for accidental damage, they’re going to hike up your premium yet again. 

More than this, there’s a problem with performance luxury vehicles. Supercars or hypercars are designed to be extremely fast. Some of them are barely road-legal, so they’re not necessarily equipped with the same technology as other road cars. You are far safer in a Volvo than you are in a McLaren. The risk of accidents increases in fast luxury cars because they can move so quickly. 

When you’re taught what do to after a car accident, one of the first things is to call your insurance provider. You can bet they won’t be excited to learn that you’ve crashed your luxury car – or that someone else has crashed into you. In fact, the second case is pretty significant. When another driver causes an accident with a luxury vehicle, you can make a claim through their insurance provider.

As a result, you can bet that this provider will fight tooth and nail to avoid paying compensation. What happens next? You go to your insurance company and try to get compensation through them. 

Why Do Luxury Cars Cost So Much To Insure?

Luxury Cars Carry a Greater Risk of Theft

We’re mentioning risk a lot, and that’s because insurance providers pay close attention to the risks associated with a vehicle. After all, they’re going to be responsible for paying out in most cases if you make a claim. We’ve already covered accidental damage claims, but what about theft?

Luxury cars are far more likely to be stolen or vandalized compared to other cars. They’re more expensive, so thieves will target them. Vandals will also find it more amusing to destroy or tamper with a luxury car because they know it’s so expensive. 

All of this means that the likelihood of theft or vandalism claims is higher than usual. So, insurance companies will up the cost of car insurance to cover this. 

Luxury Cars Will Always Be More Expensive to Insure

Hopefully, this explains luxury car insurance and why it is so expensive. These cars will always be more costly to insure because they present more risks to the insurance provider. If there’s a higher chance that you’ll be making claims – or that the costs associated with these claims will be large – then insurance companies will charge more. 

There’s not a lot you can do as a driver to get the cost of luxury car insurance down. Obviously, if you have a good track record and haven’t made many insurance claims – or been in any accidents – then your premium should be lower than most. Just keep in mind that a luxury vehicle will need a more comprehensive high-end insurance policy. 

Salon Privé

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