Performance car insurance explained

From Jaguar, to Porsche, to the iconic Ferrari, high-performance vehicles are typically sleek, luxurious and built to reach higher speeds with ease and control. But this added prestige and performance can come with a hefty price tag.

To help protect your own high-value performance vehicle, it can be important to find car insurance that adequately covers your pride and joy, on and off the road.

What is a high-performance vehicle?

High-performance cars are designed and constructed for speed. They are generally lightweight; with large, powerful engines and strong braking and handling systems. This category of vehicle may include luxury, imported or sports car models, or standard cars with performance-enhancing modifications.

Who insures high-performance vehicles?

Standard insurance policies are generally available for high-performance vehicles, but these policies may not offer cover that specifically caters for these particular cars.

Standard insurers may also be reluctant to cover particular types of high-performance sports cars such as Ferraris and Lamborghinis.

For those looking for extra benefits to match their high-powered vehicle, there are specialist insurance providers listed by the Insurance Council of Australia who may have options available, but this type of insurance can carry higher premiums.

What are the different types of car insurance?

There are four main categories of car insurance available in Australia:

• Compulsory third party (CTP) insurance is mandatory and protects you financially if you hurt or fatally injure somebody in an accident. In New South Wales it’s also called a Green Slip, and in the ACT it’s known as the Motor Accident Injuries (MAI) Scheme.
• Third party property damage insurance is optional cover for if you damage someone else’s property, such as their car or home.
• Third party fire and theft is another type of optional cover for if your car is damaged by fire, stolen, or damages someone else’s property.
• Comprehensive car insurance is an optional insurance that offers the most extensive cover, including theft and damage to your car in a range of circumstances, as well as damage to others’ property.

What can high-performance car insurance cover?

High-performance car insurance will generally include similar cover and benefits to standard comprehensive policies, such as:

• accidental damage
• damage to another vehicle or property
• theft
• repairs and towing

Depending on the specialist insurer, extra benefits tailored for luxury cars may also be included in the policy, such as:

Agreed value

Providers of high-performance car insurance may be more likely to offer agreed value rather than market value for determining the sum insured for your car. Agreed value is a fixed sum you and your insurer choose for the car, while market value is determined based on what your car would have sold for at the time of the claimable incident.

With agreed value, you know exactly what you will get from the insurer if your car is written off. This may be helpful if your car is valuable and you want to make sure you have enough money to replace it. But bear in mind that many insurers will charge higher premiums if the agreed value is higher than your car’s market value.

Choice of repairer

With a specialised high-performance car insurance policy, you may be able to choose your own repairer for the car, so it’s more likely to be fixed or restored to your liking.

Replacement car

Some car insurance policies may offer a new replacement car if your vehicle is written off. But they may only offer this benefit for vehicles under a certain age, and if it’s written off within a certain period of time from when the policy begins. Other exclusions may also apply, so check with your provider.

Excess-free window or windscreen glass replacement

While many standard insurance policies will cover the repair or replacement of damaged windows or windscreens, specialist providers may provide this benefit excess-free. Conditions will apply depending on the provider.

Salvage rights

You may be able to retain ownership of your car if it is written off, so you can then decide whether to repair it or sell it for parts. Depending on the insurer and policy you choose, this may be available as an optional extra for an additional premium.

Modifications cover

Some specialist insurers may cover the repairs or replacement of performance-enhancing modifications on your vehicle if they are accidentally damaged or stolen. This will only apply to modifications which are legal to install and have been declared to the insurer.

Are faster cars more expensive to insure?

Because most high-performance vehicles have powerful engines and expensive or unique parts or modifications, the premiums for insuring these cars will tend to be higher than for standard vehicles.

As with any car, there are a range of factors that go into determining how much you will pay for insurance, such as the age, make and model of the vehicle, and the driver or drivers’ details and driving history.

Insurers of high-performance vehicles may also look at other factors, such as the power of the car’s engine and the cost of the car’s parts or performance-enhancing modifications.

From an insurer’s point of view, the bigger and more powerful your engine, the greater the risk of an accident occurring. This may increase your premium. If your car’s specialist parts or modifications are difficult to source or expensive to repair, then your premium will likely also be high.

The valuable nature of these cars can also make them more desirable targets for thieves and vandals, which may also lead to a higher premium.

Is there a way to save on your car insurance premium?

Depending on the policy and provider you choose, there may be ways for you to help reduce the premium of your high-performance car insurance. These may include:

Keeping your car secure

Finding ways to help reduce the risk of your car being stolen can potentially bring your insurance costs down.

Consider adding an alarm system, an immobiliser (a device that only allows your car to start by using the correct key or fob), a GPS tracker or a steering wheel lock. You could also ask your insurer if installing any of these safety features could help lower your premiums.

Parking your car in a safe and secure place may also help protect your car from theft, and may lead to lower premiums compared to parking it on the street.

Taking an approved driving course

Driving a high-powered vehicle can have its dangers, so enrolling in an insurer-approved driving course could improve your skills on the road and reduce your risk of being in an accident. Reducing your level of risk could in turn help you save on your premium.

Comparing your options

To help find the most affordable insurance policy to suit your needs and to cater for your high-performance vehicle, it may be worth comparing a range of policies from both specialist and mainstream providers.

Compare car insurance

What should you consider when choosing high-performance car insurance?

Before you take out a car insurance policy for your high-performance vehicle, thoroughly read the Product Disclosure Statement (PDS) of each policy you’re considering, so you are aware of all the terms and conditions involved. This includes benefits and exclusions, and any additional excesses which may apply.

It’s also important to notify your insurer of any modifications you have made to your vehicle before or shortly after you apply for a policy. If you neglect to do so, the insurer will likely be within its rights to reject your claims and cancel your insurance.

Cover image source: Pavel Chagochkin/Shutterstock.com