Luxury Car Insurance in Australia

Do you own a luxury car in Australia? Protecting your high-end vehicle is important, given the risks it faces on the road - and the significant costs associated with luxury car repairs. 

Whether you have a prestige sports car, an exotic sedan, or a classic automobile, finding the right insurance policy is essential. 

Here's a guide to help you navigate luxury car insurance for luxury cars and compare your options online.

What qualifies as a ‘Luxury Car’ for insurance purposes?

In Australia, the definition of a luxury vehicle can vary among insurance providers. Generally, luxury cars are high-end vehicles known for their advanced features, cutting-edge technology, and higher market value. 

Brands like Porsche, Jaguar, Lamborghini, and Ferrari are typically considered luxury vehicles. You might need to consult with several prestige car insurance providers to determine if they offer tailored insurance policies for prestige vehicles. Not all insurers are luxury car insurance companies.

Some of the relevant factors that determine whether your car is classified as a luxury vehicle by your insurer, include: 

• price

• performance

• design

• modifications

• exclusivity

However, the classification of a luxury car can also depend on your perspective. After all, it’s your car. Most insurers focus more on the market value of your vehicle than its luxury status. 

How does luxury car insurance work in Australia?

Luxury car insurance cover operates similarly to standard car insurance policies, unless you’ve hired your vehicle for a special event, like a destination wedding. In this case, the rental company will offer you a luxury car rental insurance policy. It’s still worth comparing their policy with others that cover your car, because luxury vehicles can also be insured under standard policies from various providers.

However, some insurers offer specialised policies tailored to the unique needs of your luxury or prestige vehicle. These policies may provide additional cover options and benefits designed specifically for luxury car owners.

A good example is the accessibility of parts for your specialised vehicle. Many high-end vehicle parts can only be sourced from original manufacturers, or collectors, located overseas, adding to any repair bills. You’ll want to ensure your policy covers you for these added repair costs. 

Given the variety of options available, it’s worth exploring the different insurance offers to find the most suitable cover for your luxury car.

What does a luxury car insurance policy generally cover?

1. Modifications: Cover for repairs or replacements of certain aftermarket modifications are usually included in luxury car cover (e.g. upgraded alloy wheels, body kits, suspension upgrades, performance brakes) - but not all modifications are standard inclusions (e.g., turbocharged engines, roll bars), so read your policy carefully.

2. Salvage Rights: Option to retain ownership of your vehicle in the event of a total loss for parts repurposing. This can offset the financial cost of any write off, so ensure these rights are retained by you, and not your insurer or their repairer.

3. Import of Vehicles or Parts: Cover for importing vehicles or their replacement parts from overseas is typically limited to a set dollar amount - and it’s an important detail to check every time you renew your cover.

4. Multi-Car Discount: Cost savings for insuring multiple luxury vehicles under the same policy.

Specialised insurance policies are available for classic and vintage vehicles, considering their age, value, and limited usage. These policies are generally only available through specialist insurers.

Given the variety of options available, it’s worth exploring the different insurance offers to find the most suitable cover for your luxury car.

How much does luxury car insurance cost?

Luxury cars can range from a vintage Rolls Royce to a classic BMWs, and also include sports cars like Porsches and Lamborghinis, so determining your average premium isn’t easy.

That said, expect premiums to start at or around $1,000^ per month for an agreed value covering a ten-year-old Bentley coupe, with an excess of around $900^ – though the specifics listed above will impact these numbers for you. Other factors influencing the cost of a luxury car insurance policy include:

• Make and Model: The specific make and model of your car also affect the premium you’ll pay, as some models are more expensive to repair or replace - which may also affect the cost of any rental car service included in your policy.

• Market or Agreed Value Cover: Luxury car owners often prefer an agreed value cover, in order to secure a higher payout in the event of a theft or a write-off. However, this typically results in higher premiums compared to a market value cover.

• Driving History and Claims Record: A clean driving record and fewer previous insurance claims usually lead to lower premiums for you, as this indicates a lower risk of accidents.

• Level of Cover and Policy Options: Comprehensive cover and additional features unique to your vehicle’s design may result in higher premiums. Vintage cars may have features that are difficult to source and replace, such as window handles or even uniquely sized spare tyres.

• Your Insurer’s Pricing Structure: Each provider has its own pricing guidelines, so your premium can vary based on their risk assessment.

• Driver's Age and Experience: Younger and less experienced drivers generally face higher premiums due to higher perceived risk.

• Location: Areas with higher rates of accidents, theft, or extreme weather may lead to a higher insurance premium as well. Vehicles parked in a garage are usually considered safer than those parked on the road.

• Security Features: Cars equipped with advanced security systems or anti-theft devices may qualify for discounts on premiums. Conversely, older classic vehicles may not be able to be fitted for such systems, raising the premiums for insuring those cars..

• Frequency and Purpose of Use: More frequent use or use for business purposes can increase your premium, due to the higher risk exposure.

• Additional Coverage for Modifications or Accessories: If your car has aftermarket modifications or expensive accessories, additional cover for these items may increase your premium in order to adequately protect their value.

By considering these factors and comparing your various insurance options, you can find the right policy to protect your luxury car, while still managing the cost of your premium effectively.

SOURCES:

https://www.traderisk.com.au/prestige-car-insurance

https://www.mbinsurance.com.au/prestige-motor-insurance/

https://motor.shannons.com.au/

^Approximate quote numbers sourced from CBA’s car insurance quote tool at: https://www1.my.commbank.com.au/netbank/container/ESD/CarInsurance.QuoteAndApply/ContainerLaunch

https://moneysmart.gov.au/car-insurance/choosing-car-ins urance https://www.abs.gov.au/statistics/economy/price-indexes- and-inflation/consumer-price-index-australia/latest-release 

Disclaimer

This guide is opinion only and should not be taken as financial advice. Check with a financial professional before making any decisions.

*Price comparison based on Insurance Council of Australia average annual comprehensive insurance cost ($950) versus KOBA annual estimate at 8,000km driven per year, $1,500 excess and agreed market value of $40,000 (3.9¢ per km + $368.27 upfront fixed cost). There may be a difference in actual price.

^ABS Survey of Motor Vehicle Use, Australia, June 2020

#Insurance Council of Australia

GENERAL ADVICE WARNING: General Advice is advice that has been prepared without considering your current objectives, financial situation or needs. Therefore, before acting on this advice, you should consider the appropriateness of the advice having regard to those objectives, situation or needs.

If the advice provided relates to the acquisition or possible acquisition of a new insurance policy you should consider the insurers PDS prior to making the decision to purchase their product.  Information regarding the income we have been paid by the insurer for this transaction is available upon request.

Paul Coughran is the General Manager of Emerging Verticals at Compare Club. Paul has over 20 years of experience across a wide range of industries including Banking and Finance, Telecommunications and Energy. Paul leads a team of trusted experts dedicated to helping individuals make informed decisions about their insurance and utilities needs.

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