canstar
canstar
Credit Score

Luxury car insurance

Written by
Mark Bristow's profile picture
Mark Bristow
Senior Finance Content Producer
Edited by
Jessica Pridmore's profile picture
Jessica Pridmore
Finance Editor
Fact Checked
Luxury car insurance

Luxury car insurance is a type of comprehensive car cover that has been specifically tailored for high-value prestige vehicles. Because these cars may present different risks over other vehicles, luxury car insurance offers an expanded range of cover.


KEY POINTS

  • Luxury car insurance typically offers similar cover to a comprehensive policy, plus extras specifically for high-value vehicles.
  • The definition of a luxury car may vary, though it could be based on its price, rarity, or performance.
  • You’ll typically pay higher premiums for luxury car insurance, due to the generally higher value of these vehicles plus the extra cover.

Why you should insure your prestige car

Insuring a luxury or prestige car can provide valuable peace of mind that even if your highly valuable vehicle is damaged, destroyed or stolen, you should be able to replace it without putting too much pressure on your finances.

If you’ve used car finance to buy a luxury car, you may also need to have a comprehensive car insurance policy in place. Some car loans have comprehensive car insurance as part of the eligibility requirements in their terms and conditions, as the policy can protect the asset used to secure the loan, and help to reduce the lender’s financial risk.

What does luxury car insurance cover?

Like other comprehensive car insurance, a luxury car insurance policy will cover you for damage to third party property, fire, theft, and damage to your own car following an accident or other insured event.

Some of the extra cover a luxury car insurance policy may offer includes:

  • Choice of repairer: Luxury cars may require the specialist expertise of qualified mechanics to repair and service.
  • Parts imports: Repairing a luxury car may require uncommon auto parts that need to be shipped from overseas.
  • Transport cover: To protect your car when it is being imported from overseas or shipped around Australia, luxury car insurance may also include storage, transit, and even maritime liability cover.
  • Salvage rights: Allows you to keep the wreck of your luxury car even if it is written off by the insurance company.
  • Car collection cover: Similarly to a multi-car insurance policy, some luxury car insurers may let you cover a whole collection of prestige vehicles under the one policy.
  • Specialist service: Some insurers have dedicated support teams available to help look after their luxury vehicle customers.
  • Upgrades and modifications: While not all comprehensive car insurance policies will cover cars that have been modified, this is more common for luxury car insurance policies.
  • Agreed value: Lets you set a maximum amount to insure your high-value vehicle in advance.

What is agreed value vs market value in luxury car insurance?

When you insure a car, you may have the option to insure it for its market value or an agreed value. This can affect the benefits you receive from your cover, and also the cost of its premiums.

With a market value policy, if your car is written off, your insurer will offer you a sum of money based on the current estimated cost to buy a car of the same make, model, age and mileage. This means the insurance payout you receive could be affected by market conditions, depreciation, and other factors.

Agreed value car insurance is where you and your insurer set a maximum amount in advance that the insurer will pay out to repair or replace your vehicle, regardless of outside factors.

Luxury car insurance policies often include agreed value cover at no extra cost, as the market value of prestige cars can sometimes be more difficult to estimate, especially if there are upgrades and/or modifications to consider.

What is considered a luxury or prestige car?

The definition of a luxury or prestige car isn’t exact, and may depend on your own perception. It could include rare car models, high-performance vehicles, or other high-value cars that are designed to impress, with comfort and style in mind.

Some car brands are particularly associated with luxury and prestige vehicles, including but not limited to:

  • Mercedes
  • BMW
  • Audi
  • Porsche
  • Jaguar
  • Lexus
  • Ferrari
  • Aston Martin
  • Lamborghini
  • Rolls Royce
  • Bentley
  • Maserati

Luxury cars can also include older classic and vintage cars. Though specialised classic car insurance is also available to help cover the unique risks.

The Australian Taxation Office (ATO) defines a luxury vehicle as any car with GST-inclusive value over $80,567 (or $91,387 for fuel-efficient vehicles) in FY 2024-2025. These cars are subject to the Luxury Car Tax (LCT), which is imposed at the rate of 33% on the amount above the luxury car threshold, and paid by businesses that sell or import luxury cars (dealers), and by individuals who import luxury cars.

How much does luxury car insurance cost?

You’re likely to pay more to insure a luxury car than a more everyday vehicle. Firstly because of the higher average value of luxury cars compared to other cars. Secondly, the extra cover offered by luxury car insurance means you’ll likely be charged extra in your premiums.

How to save on prestige car insurance premiums

Some of the options available to help you potentially save money on luxury car insurance premiums may include:

  • Raising your excess: Agreeing to pay more out of your own pocket if you make a claim could mean paying lower car insurance premiums.
  • Protecting your car: Storing your luxury car in a locked garage and installing alarms, immobilisers and other security features could help give an insurer peace of mind that could lead to lower premiums.
  • Limit younger drivers: Restricting drivers aged under 25 from driving your car could help to reduce your insurer’s risk and lower your premiums in turn.
  • Pay premiums annually: Some insurers may offer premium discounts if you pay for your policy upfront as a lump sum each year, rather than in monthly instalments.

How to choose between comprehensive and third-party coverage for luxury cars

A comprehensive car insurance policy can often prove valuable for luxury car owners, as it covers damage to their prestige vehicle. If the car is damaged or written off in an accident or other insured event, the insurer should be able to help you repair or replace the valuable vehicle.

However, this comprehensive coverage can come at a high cost in premiums. If you want to save some money on insurance, you may be able to instead opt for third party car insurance, either third party property damage or third party fire and theft. While these policies don’t cover damage to your own car following an accident, they may cover other insured events and also your liability for damage to other cars, and charge lower premiums.

How to choose the right car insurance for your luxury vehicle

The process of choosing a luxury car insurance policy can be a lot like choosing any other car insurance policy. The best choice for you will depend on your financial situation and personal goals, but you can get started by taking the following steps:

  1. What kind of car insurance policy do you want?
  2. Compare policies from different insurers.
  3. Contact your preferred insurers for quotes.
  4. Compare the premiums, fees, exclusions, features and benefits.
  5. Consider what excess you’d be happy to pay if you make a claim, and how this could affect your premiums.
  6. Choose a policy and accept the quote.

Cover image source: LanaStock/istockphoto.com

Mark Bristow's profile picture
Mark BristowSenior Finance Content Producer

Important Information

For those that love the detail

This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.