Can You Get Insurance on a $1M Car? Here’s How It’s Done
Every driver knows how car insurance works. Whenever you get a new car, you need to have insurance to be road legal in 49 of the 50 states (New Hampshire is an exception). Insurance prices vary depending on where you live.
Although many insurance companies offer different rates depending on the vehicle, there are certain vehicles that companies will not consider insuring because of their value. The cost of some cars is so high that if they are in an accident, the repair costs are higher than the insurance companies are willing to pay. So if the car is worth $1 million or more, how does the owner get insurance?
How Does Car Insurance Work?
You should not drive without insurance. It is a blanket to protect drivers if they damage the car in a crash. The insurance company will make sure that the damages are paid without the driver paying out of pocket, except for the deductibles that they may have to meet, depending on the policy. A mid-priced car is easy to insure, but exotic cars can be more challenging.
How Is Standard Car Insurance Different From Regular Insurance?
For the average car buyer, insurance premiums will be based on several factors such as driving record, geographic location, age of the driver and the value of the vehicle. Policies from many insurers can cover most vehicles on the road.
For foreign cars with six figures, insurance companies willing to deal with these cars will tell the owner how much the car is worth and set the premium based on that number. For cars worth up to $1 million or more, things are more complicated. While many mainstream insurance companies don’t focus on these types of vehicles, owners may have to look elsewhere to companies like Hagerty or Chubb for insurance.
What Do Insurance Companies Say?
Brian Rabold, vice president of auto intelligence at Hagerty, tells the Detroit Free Press in an interview about how multi-million dollar vehicles are insured. The Free Press is part of the USA TODAY Network.
“We have what we call an agreed price policy. Hagerty looks at the market, gathers all the information we can on these types of vehicles and then decides what the price is,” said Rabold. “We produce a price guide, we publish those prices online, so we’ll sit down and talk to that client and set that rate, and then agree that’s the price covered.”
Abe Barnett, vice president of global collections at Hagerty, said there are additional factors to consider.
“When we look at insuring a hypercar, we consider factors including where the car is kept, its use, expected mileage and even if it is part of a collection, as many of our members have many cars that show their incredible passion. The driver’s experience can play a big role. Having previous ownership and experience in that type of operation is a huge advantage.”
Decreasing the average amount of premiums is tricky due to a variety of factors, but one thing is clear: Payments will be higher for more expensive cars.
How Do Luxury Car Companies Feel About Insurance Plans?
Car manufacturers who sell these expensive cars consider insuring them as a simple process, similar to insuring other high-end assets such as a luxury home, private jet or yacht. Sascha Doering, CEO of Bugatti of the Americas, tells the Free Press in an interview how their wealthy customers go about insuring these types of cars.
“Typically, they’re the highest value people who insure the highest value assets on a regular basis. They work with their individual insurance partners to make it work. They’ve always been very smart about it.”
Keenan Thompson is an auto culture reporter for the Detroit Free Press. Contact Keenan at [email protected]. Follow him on Instagram at @keenanautos. To sign up for our automotive newsletter. Become a subscriber.
This article appeared in the Detroit Free Press: Can you get $1M car insurance? Here’s how to do it
Reporting by Keenan Thompson, Detroit Free Press / Detroit Free Press
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