Image: Eduardo Merille
A rare Ferrari formerly owned by boxing great Mike Tyson has sold at auction in Florida for $2.6 million – just one high-profile example of a continuing trend in luxury car sales.
Despite a fluctuating economy over the past decade, luxury car sales have remained fairly consistent, even during the recession. Wealthy buyers seem to always be willing to spend big on the right vehicle. But what goes into covering something so rare and unique?
Tabetha Hammer, at Hegarty Insurance, a specialty vehicle insurer, spoke to Insurance Business about insuring high-end automobiles and the benefits for luxury car owners in choosing specialized cover.
“Our policy is purpose-built for luxury vehicles as opposed to the general market,” Hammer said.
“We also monitor trends in the market place and understand why people buy specific vehicles, whether it’s passion or investment driven, and can have meaningful conversations with clients when they call in to discuss.”
Sometimes, she said, luxury cars can actually be insured for cheaper than daily drivers – “but certainly not always.”
That’s because luxury cars are often safer to insure.
“There are not a lot of challenges in insuring these vehicles,” she explained. “We don’t have concerns about the cars being driven to the grocery store. These types of luxury vehicles are really used specifically for a hobby and for showing at collector events.
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“Those cars are driven with respect. Obviously it’s a huge investment for the owner.
“In general, a specialty insurer can offer a lower premium than a daily driver insurer, as we recognize these vehicles are not being used as a regular use vehicle.”
But insuring a car such as the Ferrari F50 – one of only 349 produced – can be slightly trickier, due to its rarity.
The difficulty in insuring unique vehicles is coming to an agreement with the owner on the vehicle’s worth.
“We recognize the value of the vehicles and insure them for full value – guaranteed value – as opposed to depreciating them over time,” Hammer said.
“That’s really what we specialize in… understanding that the parts for [luxury cars], should something happen in a claim process, are going to be much more expensive than your daily driver vehicle,” Hammer said.
“One of the benefits of being with a specialty insurer is we have an understanding of that and we have a network of restorers and parts specialists.
“Our claims team only deals with collector vehicles. We don’t treat repairs like a standard repair shop would. We understand the importance of repairing them correctly and sending them to specialists.”
Between 2007 and 2016, luxury car sales maintained a market share between 11.1% and 11.9%, according to car information platform Edmunds.
Last year’s luxury car sales of 2,054,710 was the highest total in at least the last 15 years.
