With the Insurance Corporation of B.C. (ICBC) announcing in November that it is considering dropping luxury car coverage, insurers based in the United States are poised to help fill in the void.
British Columbia’s government insurance provider said that it was phasing out coverage on cars worth over $150,000 because trying to cover for such cars puts too much burden on policyholders who own more mainstream vehicles. Currently, ICBC’s basic policy for all types of cars is roughly $1,000 a year, but luxury car repair costs can easily outpace those of regular vehicles.
Loretta Waters, the vice-president of US-based trade association Insurance Information Institute (III), said that none of the III’s members have said that they plan to discontinue their coverage for luxury cars.
“Typically, the detailed work and expensive materials used in these cars is more expensive to insure. Some of these cars even appreciate in value, but no one has said they are pulling their coverage,” Waters told
Private Wealth.
AIG Private Client Group president for US and Canada Jerry Hourihan believes that the ICBC’s exit from the luxury car insurance market means more business for
AIG.
“There is no cause for concern about obtaining coverage in the United States or the rest of Canada,” Hourihan pointed out. “We offer high deductibles for physical damage to keep the costs in check. Of course, the rate depends on a person’s driving record, where they live and other factors. However, a person who owns this type of car is going to want good coverage on the liability side to protect against lawsuits. Car owners are going to want to buy from a company that knows the market and can back you up when you need it. Buying the cheapest insurance is not the way to go.”
Hagerty Canada vice-president James LaClair highlighted Hagerty’s desire to help serious car enthusiasts ensure their luxury automobiles—which are often not the owner’s primary vehicle.
“These cars hold their value,” LaClair explained. “Insurance rates are always subject to change, but we think we are appropriately priced. We have no plans to pull back from the market or make any changes.”
Other insurers have reassured that their rates for luxury automobiles will not change any time soon. PURE Auto Insurance senior vice president and chief actuarial officer Steve Oakley even believes that thanks to emergent automobile technology, luxury car insurance could be even lower in the years to come.
“With all of the new technology that is available—cars can brake themselves or even drive themselves -- there will be fewer accidents and fewer cars will get dinged up and fewer people hurt,” Oakley said.
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