If owning a luxury vehicle is a dream, more Americans are living it. Kelley Blue Book found that both the Tesla Model Y and Model 3 were two of the top 25 best-selling cars in 2023, selling over 600,000 combined units. However, an expensive sticker price can also spell expensive insurance rates. Bankrate found that, on average, a full coverage policy on a  BMW 330i costs an average of $3,018 per year, which is $475 higher than the national average. Whether you’re thinking about upgrading your car or are already an owner, Bankrate has all of the information you need on luxury car insurance.

What is luxury car insurance?

A luxury car is one that has higher levels of amenities, comfort, quality or performance compared to a regular vehicle. Exotic cars are a type of luxury car with a greater emphasis on speed and driving performance. An example of a luxury car is a Jaguar F-Type with a starting MSRP price of $77,900, while an exotic car example is the Ferrari 812-Superfast with a starting price of $429,815.

Insurance for luxury cars almost always costs more than the national average cost of a policy. This is largely due to the higher repair costs. If your luxury car is damaged, the cost of parts, repairs and labor will likely be significantly higher than for standard vehicles. Although you may be able to obtain insurance with a standard insurance company, depending on the type of vehicle you have, you may need to seek coverage with a company dedicated to insuring high-end vehicles.

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Luxury car insurance coverage types

If you own a luxury car, you must carry at least the minimum required insurance coverage limits in your state, just like if you are insuring a standard vehicle. You may want to consider the following car insurance coverage types for your luxury car:

  • Liability coverage: Since luxury cars are more expensive than standard vehicles, you may have more assets to protect. Carrying higher liability limits can further protect you financially in the event of an at-fault accident.
  • Medical payments coverage: This coverage pays the medical bills for you and your passengers if you are injured in an accident, regardless of who is at fault. If you live in a no-fault state, you may need to purchase personal injury protection coverage instead of medical payments coverage.
  • Collision coverage: If you are involved in an accident and your luxury car is damaged, collision coverage is designed to pay for the damage to your car after you pay your deductible.
  • Comprehensive coverage: This coverage pays claims for broken vehicle glass, theft, vandalism, weather damage and damage caused by striking an animal. It is sometimes called “other-than-collision coverage.”
  • Gap insurance: If you finance or lease your luxury car, you might want to consider gap insurance. This pays the difference between the vehicle’s actual cash value and the loan amount in the event the vehicle is totaled.

You may also want to check with your insurance agent to see if your company might use aftermarket parts for repairs. If so, some car insurance companies offer original parts coverage, sometimes called “OEM coverage,” for an additional cost. This coverage means that replacement parts used on your luxury vehicle are original manufacturer parts rather than aftermarket parts.

Exotic car insurance coverage types

Exotic vehicles are a subset of luxury cars but tend to have more robust engines and be designed for high performance. If you own an exotic car, just like if you own a luxury car, you have to maintain at least your state’s minimum liability limits. Because exotic cars often have high horsepower and speed capabilities, you may need to seek out specialty auto or collector car insurance for a better selection of specific coverage types, such as:

  • Agreed value coverage: With this coverage, both you and the insurance company agree to the value of your vehicle. If your vehicle is damaged, your insurer can pay up to the agreed-upon value.
  • Automobilia coverage: If you own an exotic car, you may also own valuable collectibles from the manufacturer. Some specialty car companies offer coverage for your license plates, literature, hood ornaments, signs, displays and other automobilia.
  • Tools coverage: If you have personal tools used to maintain your exotic car, you may want to cover them under your auto insurance policy. If your company offers it, this option provides coverage for accessories, storage cabinets, toolboxes and tools. Normally these items are covered under your homeowners insurance with a separate, and often higher, deductible than what may be on your auto insurance policy.

Exotic car owners may also consider comprehensive, collision, medical payments or personal injury protection, OEM coverage and gap insurance. Just like luxury car owners, you may also want to consider higher liability limits to further protect your assets in the event of an at-fault accident.

How to save on luxury and exotic car insurance

Insuring luxury and exotic cars can cost substantially more than insuring a basic vehicle for a few reasons. First, flagship luxury SUVs cost close to $100,000, on average. If your luxury vehicle is damaged or totaled, the cost to repair or replace it is typically high. Second, your risk profile affects your insurance rates. Since luxury and exotic vehicles are known for speed, an insurance company might perceive their owners as more prone to risky driving.

While luxury and exotic cars cost more to insure than standard cars, there are still ways to hone in on the cheapest luxury car insurance with these savings strategies:

Take advantage of discounts

Most insurance companies offer discounts for savings on your auto insurance premium. Anti-theft measures like VIN etching on your windows, a car alarm or storing your vehicle in a locked garage could qualify you for a discount. Safety features such as anti-lock brakes, airbags, daytime running lights and electronic stability control could similarly reduce your rate. Taking advantage of as many discounts as you can could reduce the cost of your car insurance.

Store your vehicle in the off-season

If your car is kept in a garage and not driven for a length of time, you may be able to save money by removing certain coverage types while your vehicle is not being driven. You will need to check with your insurance provider to confirm that you are still meeting your state’s insurance requirements. If you have a loan or lease, you may also want to check with your financial institution to ensure that you carry the coverage types and limits they require.

Frequently asked questions

    • The best car insurance company for luxury cars will depend on your specific needs. The company that is best for you will have the coverage types, discounts and features that you are looking for. Getting quotes from multiple companies and comparing them can help you determine the right company for your needs.
    • Many factors influence the cost of car insurance, including the vehicle value, repair costs, theft risk and the profile of the driver. While not all these factors are related to the car, the costs associated with luxury cars tend to be higher. As a result, you may pay several hundred dollars more per year to insure a luxury vehicle.
    • Although car insurance for luxury and exotic cars is more expensive than insurance for standard cars, there are ways to save. You may be able to save money on your car insurance premiums by shopping around and comparing quotes, keeping a clean driving record and taking advantage of discounts.
    • Insurance providers typically see a speeding ticket as an indication that you are a higher-risk driver. As a result, you will likely be charged a higher insurance premium. On average, drivers’ car insurance premium increases by 21 percent after a speeding ticket.
    • How much car insurance you need depends on several factors. For example, the value of the vehicle, your driving habits and lease or finance requirements all influence the amount of insurance you need. In addition, each state has minimum liability requirements. Insurance experts generally recommend more than the minimum to protect your finances in case of an accident. However, you may want to discuss your needs with an insurance agent or broker and shop around to ensure you are getting the best rates.