Luxury & Exotic Car Insurance: What it is and How to Find the Cheapest Rates

Luxury & Exotic Car Insurance: What it is and How to Find the Cheapest Rates

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Luxury car insurance covers vehicles that are high in cost and performance, and are made by a luxury manufacturer—such as BMW, Mercedes-Benz, and Lexus. Coverage options for these vehicles are largely the same as they are for more common vehicles and we recommend having full coverage—liability, comprehensive, collision, personal injury protection or medical paymement, and gap or new car replacement coverage.

The high price, increased theft risk, and costly repairs associated with owning a luxury vehicle, means insurance for these vehicles can be very expensive. And, in the case of exotic vehicles, finding an insurer that offers coverage could be particularly difficult as well. Read below to learn about luxury and exotic car insurance and the steps you can take to lower your premiums.

What Type of Coverage Do You Need for a Luxury Car?

We recommend that owners of luxury vehicles have the following coverages:

  • Liability insurance
  • Collision and comprehensive insurance
  • Personal injury protection or medical payments insurance
  • Gap or new car replacement insurance

Liability Insurance

The general rule for liability insurance is to buy enough to cover your at-risk assets; meaning you should cover the value of anything you stand to lose if you are held liable for damages. This insurance covers medical expenses and property damage to other parties in the event of a car accident, if you're proven to be at fault. Sometimes, insurers have a maximum amount of liability insurance that they'll cover in a particular state. For example, Allstates maximum liability limits in New York are $250,000 per person and $500,000 per accident for bodily injury (BI) liability, and $100,000 per accident for property damage (PD) liability. For additional liability coverage, consider purchasing an umbrella policy (available in $1,000,000 increments), which kicks in after your BI and PD limits are met.

Collision and Comprehensive Insurance

Full collision and comprehensive insurance—which both cover damages to your own car—are an important and expensive part of insuring your luxury vehicle. Collision insurance covers damages to your vehicle in an accident that involves your car hitting another vehicle or structure. Comprehensive insurance covers damages to your vehicle caused outside of accidents. This includes damage caused by natural disasters, falling objects, and theft to name a few examples.

Having collision and comprehensive coverage ensures that you're covered for the full cost of any repairs to your vehicle, regardless of fault. Premiums for this type of coverage are based on the value of your car and its repair costs, meaning that the high average value and repair costs of luxury vehicles make for high premiums. If you prefer that your vehicle is repaired with only original equipment manufacturer (OEM) parts, then you should choose an insurer—such as Nationwide—that has an OEM part requirement option as part of their comprehensive and/or collision coverage(s). If you choose this option, your insurer will pay for OEM parts, whenever possible, for a repair even if there are less expensive aftermarket parts available. This will raise your premium, but prevent you from paying out of pocket for expensive parts.

Personal Injury Protection and Medical Payment Coverage

Personal Injury Protection (PIP)—which covers you and your passengers' medical bills in the event of an accident—is an important coverage for luxury car owners to have, given the heightened risk of injury from a car crash that comes with high powered vehicles. For this coverage, your insurer will pay regardless of who is at fault, meaning claims are typically processed faster and with less dispute. If PIP is not offered by your insurer, or isn't available in your state, then consider medical payments coverage. Medical payments coverage functions similarly to PIP, but doesn't pay out for lost wages, or other similar losses.

Gap and New Car Replacement Coverage

If you're leasing or financing a luxury vehicle, then you should purchase gap insurance, which covers you if you owe more on the vehicle than your insurance will pay to replace it in the event of an accident. Since your insurer will only pay the car's actual cash value, you could be on the hook for thousands of dollars if your vehicle depreciates in value rapidly—which happens to many luxury vehicles once purchased and driven—if you don't have gap insurance.

If you are purchasing a new luxury vehicle outright, consider new car replacement coverage. The cost of buying a replacement car—of the same make and model—if you total your vehicle is covered under this type of insurance. However, it's usually only available if you purchase comprehensive and collision coverage.

How Much Does Luxury Car Insurance Cost?

It costs significantly more to insure a luxury car rather than a non-luxury car. But, based upon our research, costs of insurance doesn't necessarily go up directly in accordance with the price of your car.

The luxury sedans that we gathered quotes for were, on average, around $1,800 more expensive per year to insure than the comparable non-luxury models. However, while the manufacturer's suggested retail price (MSRP) of the luxury models was 400% greater than the more basic models, the insurance costs were only 63% greater. This could be because of safety features or because a large part of your insurance costs are based on liability coverage, which is not affected by vehicle price.

2017 Vehicle Make and ModelMSRPAverage Cost Per Year - New YorkAverage Cost Per Year - California
Mercedes Benz 550S Sedan$96,600$5,384$4,688
BMW 740i Sedan$81,500$5,034$4,631
Honda Civic EX$21,140$3,337$2,887
Toyota Camry LE$23,070$3,409$2,855

How to Get The Cheapest Luxury Car Insurance Rates

When shopping for luxury car insurance, gathering a range of quotes is important to make sure you don’t overpay for coverage. It's relatively easy to get online quotes from top insurers—State Farm, Geico, Allstate, etc—for more common luxury vehicles. Companies can offer different prices for the same amount of coverage, so comparing quotes is necessary. We suggest starting with large national auto insurers as they will likely be able to provide coverage in your area. These insurers may not offer coverage for some high cost exotic cars.

Multi-Line Discounts

Many insurance companies will offer you a discount on price if you bundle multiple lines of insurance. For example, if you already have an insurer for life, auto, or another type of coverage, they may offer you a discount for covering your luxury car through them as well. Avoid adding high risk drivers—such as young drivers—to your plan, because they'll cause dramatic increases to your insurance premiums.

Reducing Coverage

Another way to cut back on costs is to drop all coverage—except comprehensive—when you're not planning on driving a vehicle for an extended period of time. Maintain comprehensive coverage in case any non-driving related damages to your vehicle occur. If you have a vehicle that you are only going to drive in the summer—a convertible for instance—check with your insurer to see if they'll let you reduce your coverage while you put your car in storage.

Don't drop collision insurance if you plan to store your vehicle in an unsecured location with reduced coverage because you won't be covered for hit and run incidents. You cannot reduce liability coverage for most leased vehicles because of minimum liability insurance requirements.

Luxury Vehicle Safety and Anti-Theft Discounts

Auto insurers usually give discounts for vehicles with safety features such as anti-lock brakes, daytime running lights, airbags, and traction control systems. Many of these features are standard on luxury vehicles so make sure you're receiving all possible discounts from your insurer.

Insurers often give discounts for things that reduce the risk of theft like car alarms, secure parking, electronic tracking devices, and vehicle identification number (VIN) window etching. VIN window etching involves engraving your vehicle’s identification number onto the windshield and windows of your vehicle, and can be done at your dealership or an auto body shop for around $100 to $200. This makes your car more easily recoverable by law enforcement agents, and reduces its value to thieves who are looking to take apart your vehicle–as they have to discard parts that are traceable.

Exotic Car Insurance

A subsection of luxury cars—which are very expensive and very rare—are considered to be exotic cars. Examples include Ferraris, Lamborghinis, and McLarens. These vehicles represent a massive risk for insurers due to their huge cost, expensive repairs, and the high crash risk that come with very high horsepower. Another unique aspect of these cars is that, unlike most new vehicles, they may increase in value over time.

If you own an exotic car, you should consider a collector car or specialty auto insurance policy. These policies often operate on an agreed value for your vehicle, meaning that you and your insurer decide a total payout price to replace your vehicle. This agreed value is the maximum amount you're covered for, which eliminates disputes if your insurer has a lower evaluation of your exotic vehicle's actual cash value than you would expect. The top companies that offer specialty auto policies for exotic cars include Hagerty, Grundy Insurance, and PURE Insurance. To qualify for these policies, you might need to meet the following criteria:

  • Your vehicle needs to be of a certain value or age (eg above $100,000 or 25 years old)
  • Your vehicle needs to be in good condition
  • Your vehicle cannot be your regular-use car
  • You need to store your vehicle in a locked garage when not in use
  • Your need to be over 25 years old and have a good driving record

These insurers are often more concerned about more serious driving violations like DUIs, reckless driving, and excessive speeding when evaluating your driving record. You may still be eligible for these policies if you only have a few minor violations on your record in the past few years.


We gathered auto insurance quotes from Allstate and State Farm for both a 40-year-old man and woman with a clean driving record in New York City and Los Angeles. The policy included the following coverages:

  • $100,000 per person and $300,000 per accident for bodily injury liability
  • $50,000 in property damage liability
  • $25,000 of personal injury protection or medical payment (if PIP was not offered) coverage
  • $25,000 per person and $50,000 per accident in uninsured/underinsured motorist bodily injury coverage
  • Comprehensive and collision coverage with $500 deductibles

Bailey is a Research Analyst at ValuePenguin, covering insurance. He graduated from Occidental College with a B.A. in Mathematics and a minor in Computer Science. Bailey's analysis has been featured by CNBC, the Houston Chronicle and the National Transportation Bureau Safety Board.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.