What Is Exotic Car Insurance?

What Is Exotic Car Insurance?

Exotic car insurance is a specialty insurance policy that protects an expensive and rare luxury vehicle. This type of coverage falls under the umbrella of collectible car insurance, which can typically be bought through standard insurers or insurers that specialize in collectible and luxury cars.

Depending on how your insurance company classifies it, your car may be defined as "exotic," "classic" or a "sports car." The vehicle's make, model, engine size, horsepower and weight usually factor into the classification. Vehicles made by Lamborghini, Rolls-Royce, Pagani and McLaren are just a few typical examples of exotic cars.

This type of car poses more risk to insurers because of their high value, expensive repairs and increased potential for accidents. Insurance companies often charge higher rates to mitigate that risk—and some won't insure exotic cars at all. Companies like Leland-West, Hagerty, Grundy Insurance and PURE Insurance offer coverage for collectible or exotic cars. You may also be able to get coverage through a traditional auto insurer like Progressive or GEICO.

Special Requirements of Exotic Car Insurance

When you take out an auto insurance policy for an exotic car, the insurer may set rules you'll need to follow to keep the policy in force. Here are some of the requirements you may encounter:

• Exotic cars usually can only be used for pleasure, so you may need to have another insured car for daily use.
• The exotic car must be parked in a safe place, such as a locked garage.
• Your policy must include at least the minimum liability insurance mandated in your state. But the insurance company may also require you to have collision and comprehensive coverage as well.
• You'll need to be fully licensed with no state-imposed restrictions. You may also need to show you've been licensed for a certain number of years.

Types of Policies Available for Exotic Cars

When you're researching exotic car insurance policies, they may include the following parts:

Agreed Value

A standard auto insurance policy typically uses your car's actual cash value to determine potential claim payouts. If your car is totaled, you'd receive a check for the current value of the car right before the accident, minus depreciation. In contrast, policies for exotic cars use a method called agreed value. You and the insurance company agree on the car's value—without factoring in depreciation—before the policy is issued. You'll generally receive a larger payout in the event your car is totaled.

Usage Limits

Exotic car insurance policies typically allow you to drive the car for pleasure or at an auto show, but you may need to drive a standard vehicle for everyday use or running errands. The policy may also contain language about annual mileage restrictions. If you have concerns about the limitations, the insurance company may be able to add an endorsement to expand coverage.

Optional Features

Depending on the insurance company you choose and the type of policy you buy, you may be able to add coverage beyond liability, collision and comprehensive insurance. Some optional features may include:

• Towing coverage
• Spare parts coverage
• Trip interruption coverage
• Relocation expense reimbursement
• Pet injury or death coverage
• Roadside assistance

How to Choose the Best Policy for Your Exotic Car

Here are steps you can take to find the best exotic car insurance policy for your situation.

1. Look for the Right Insurer

Some car insurance companies won't insure high-end vehicles, so you'll need to look for ones that offer coverage. Start by looking for policies under the term "exotic car insurance," though you may need to dig deeper. Sports car insurance, luxury automobile insurance and classic car insurance policies may encompass exotic cars. Then check whether the company offers coverage for your specific make and model.

2. Get a Quote

Car insurance companies typically look at factors like your car, driving history, location, age and gender when setting premiums. But they all use a different formula when setting rates, so it's a good idea to get quotes from multiple providers. Use the same coverage information if possible to make a good comparison. Then check the price on each quote and look at what's included in the policy.

To find a policy that's right for you, start by getting car insurance quotes from multiple providers. Compare the pricing and details on each to see where you can get the best deal.

3. Know Your Car's Value

You may not need an appraisal to buy an exotic car insurance policy, but it may help you determine the agreed value of your car. This step helps ensure you'll get the right payout if you need to file a claim. Photographing your exotic car's engine, exterior and interior may come in handy when you discuss the agreed value with the insurer. And if you upgrade or change anything in the car, consider updating your documentation as well. The car may increase in value.

4. Understand the Policy Before Signing Up

Check the physical damage section of the policy to see if it includes "agreed value" or "guaranteed value" coverage. According to insurer Leland-West, the policy should contain language such as, "In the event of theft or a total loss we will pay the agreed value." This ensures you'll get the expected payout if the car is totaled.

The policy may also state that you can't let another person drive your car and may include use limits, which govern the number of miles you can drive the insured car each year. Ask the insurance company to clarify any details if you're not sure what your policy language means. If you don't follow the rules outlined in the policy, it may become void.

The Bottom Line

Exotic vehicles are unique by nature, so they'll need special insurance coverage to match. Policies designed for exotic vehicles usually include "agreed value" coverage and may allow you to include extra features. But because these cars are so expensive to repair, you may need to follow use limits to keep the policy in force.