Supercar Insurance - Why are costs so high?
Why are rates continuing to rise and more importantly, how can you get the best insurance price for your supercar?
Insurance costs are rising in all sectors, but for motorists, it seems to be a particular problem. Supercar owners in particular are being offered ridiculous premiums as UK supercar insurance companies look to reduce their risk as much as possible.
Why are rates continuing to rise and more importantly, how can you get the best insurance price for your supercar?
Why are insurance costs so high?
Inflation and rising cost of repair
This is seen as the major factor in why costs are high. Inflation in the UK has been high for a number of quarters which impacts prices across the board. The overheads of many of the vehicle support businesses, such as repair specialists, garages, storage and even the insurance brokers themselves are significantly higher than 24 months ago and these costs are being passed on to the end user.
Supply chain problems
Global business is still recovering from the COVID-19 pandemic and the UK is still attempting to adjust after Brexit. Throw in the Ukraine war and we see huge challenges in transportation and importing car parts into the UK. Internationally, the cost of raw materials and labour have driven up costs, making car manufacturing a turbulent sector. All these factors increase costs and have increased premiums.
Claims are at a high
There is now a return to pre-pandemic working practices with many more employees now travelling to the office. As driving practices and traffic numbers get back to ‘normal’, this will inevitably result in more accidents, and it seems insurers have struggled to keep up and need to protect their bottom line with higher premiums.
As prices rise and become unaffordable, we also see an increase in uninsured drivers, which in turn impacts premiums and these costs have to be shouldered by insured motorists.
Car thefts are also up. If we have a supply chain problem, we create a lucrative market for stolen parts. There is now a thriving trade in thefts in the UK for the parts alone and a car can be stolen and stripped in a matter of hours.
Higher global reinsurance costs
UK supercar insurance companies will be reliant on being able to reinsure themselves for significant losses or unexpected claims. We are in a period of uncertainty as the Ukraine war continues and with violence in the Middle East, plus with a number of high profile natural disasters, global insurance costs in all sectors, not just the vehicle insurance sector have increased.
What can we do about supercar insurance costs?
Look at agreeing a value
Supercar prices can fluctuate and you’ll find an insurer will work on the worst case scenario. In this case the higher value your car would achieve is sold or needed to be replaced. Revisit this every year to ensure you are not underinsured, or paying over the odds for a higher value car.
Increase your excess
Choosing to increase your voluntary excess could make a healthy impact on your yearly premium. Just make sure you are prepared to balance the excess with your premium. Even the safest weekend supercar driver can have a wobble.
Storage
Where is your car kept? This can make a huge difference. Insurers like their cars to be locked up, out of sight when not in use. At the very least it should be kept off road. Anything else and you should expect to be paying more. As mentioned above, with the supply chain issues even the smallest ding can now be a costly repair.
Are you considering modifications?
Insurers don’t like anything they don’t fully understand. The moment you admit to a modification, even the smallest cosmetic alteration, that starts alarm bells ringing and you can be sure your premium will reflect this. It was the case that you could argue a modification makes the supercar unique and therefore easier to trace if stolen, but the sophistication of international gangs have negated this in recent years. If your car is stolen, it will be in a shipping container or as parts so any individuality is no longer as important.
Where and how do you drive
If you don’t intend to drive the car outside the UK, or even transport it over to Northern Ireland, then you should expect to pay less. Check your insurance details to make sure they are not making the assumption you will be driving in mainland Europe. Also, a quick and simple way to reduce costs is to look at the amount of miles you are doing. Doing under 5000 miles can really help keep the cost down.
We all love a Track Day, but this obviously increases the premium. If it is difficult to get away and complete the number of laps you would like to, consider speaking to your insurer to agree to a special Track Day price for when you’re using the car. Work and other commitments so often get in the way, that for all the good intentions, we are using our cars for a fraction of the time we are insuring them for.
Work with the insurer to find out what they prefer
Most supercars are fitted with a tracker, but if not and you are considering installing one, then ask which services the insurer recommends. Most brokers will be working from a formula, but will have some discretion and giving them the confidence they are involved could help obtain a preferential price.
What do you declare as your job?
This will impact the way insurers judge your risk. Yes, we all want to be seen as dynamic and interesting, but insurers want boring and safe. For example, popular YouTuber Mark McCann is a well known car collector and even he was refused insurance on his Lamborghini Revuelto. McCann is a British UTV and stock car champion and is obviously a skillful driver, but being a YouTuber and a racing driver is too much of a risk.
Is it going to get better in the future?
In the short term, probably not. Prices have dramatically increased over the last year with a report from the Association of British Insurers (ABI) showing premiums across the board have increased 21% compared to the same quarter last year. The ABI report does however suggest this rise is slowing and hints there might even be a slight drop in prices this year, but they will remain stubbornly above what we were paying in 2023.
Can the manufacturer do more?
Manufacturers are responding with their own solutions. Maybe the answer in the future could be that supercar manufacturers offer their own insurance as part of any deal or leasing agreement?
In Australia, Ferrari have their own insurance products, including various mileage options and even
£200,000 coverage for track day events, provided they are hosted by Ferrari themselves. This is a great way to enable supercar owners to enjoy track days where they have previously been denied insurance. Track days are popular and can be one of the main reasons some choose to buy supercars. Manufacturers offering track insurance makes perfect sense. Take away that option and drivers might look to get their thrills elsewhere.
The rise in thefts has also seen some manufacturers resorting to creative ways to keep premiums down. Jaguar Land Rover (JLR) now operates private security at London ports to intercept Range Rover thefts designed to make it harder for UK gangs to target their cars. As a leading UK based company, you can be sure they are also lobbying the government for better resources to tackle car crime in the UK and protect this sector and the jobs it creates.
Supercars manufacturers are also developing additional security technology. Systems such as Pin-to-Drive, face recognition and biometric scanning will become commonplace, so maybe the long term solutions will help drive prices down.
We can only hope the market settles, but with global factors influencing supply chains, costs will struggle to fall. Many supercars owners are not stereotypical playboy millionaires, they are hard working individuals who want to enjoy an amazing drive. As more of these customers get squeezed, we must hope insurers recognise this and provide affordable and sustainable ways to run their pride and joy.
