According to statistics from IHS Automotive, luxury automakers such as Aston Martin and Lamborghini, sold more cars in 2015 than ever before and they estimate that luxury sales will account for about 13.5% of all new vehicle sales in 2020. On the local front, the National Association of Automobile Manufacturers of South Africa (NAAMSA) states that in June this year alone 305 Land Rover, 84 Porsche and eight Maserati motor vehicles were sold in the country.
San-Mare van Zyl, Head of Insurance Operations at MUA Insurance Acceptances, says that as more consumers are opting to buy luxury vehicles it is becoming increasingly important that the complexity in design and architecture of these vehicles is taken into account when it comes to insurance. “What makes modern high-end motor vehicles so special is that they have all the latest technologies, devices and safety features built into their highly intelligent electronic systems. In addition to this, they have gorgeous luxury interiors with materials such as leather seats and wooden dashboards.”
The actual mechanical parts of these exclusive vehicles are also more expensive than those of general passenger vehicles and are often made from non-traditional material such as aluminium alloys and carbon fibre. As a result of these factors, the costs to repair and replace these materials should the vehicle get damaged can prove to be substantial, she states.
“Luxury vehicles are becoming more costly and complex to manufacture, maintain and repair and therefore also more complex to insure, which means that a standard motor insurance policy will not be sufficient for the owner. A specialised insurance policy will provide the best insurance cover should the car be stolen or damaged. When it comes to high-end vehicles, damage does not just occur to the outside of vehicle, elements such as the electronics or interior can easily be damaged as well and cost a small fortune to fix,” van Zyl explains.
For example, should a high-end vehicle become involved in a collision with a less- expensive passenger vehicle, the collision could damage some of the expensive technology found in the luxury car’s engine room. These damages will cost the insurer much more to repair than the damages that occurred to the other vehicle which does not have any high-tech features.
According to van Zyl, even replacing just one headlight of a high-end vehicle can be pricey should it be involved in a front-end collision. “Once a more serious accident occurs and more parts need to be replaced, such as the bumper, intelligent headlights or sensors, the total costs could approach close to half a million rand.”
A proper insurance policy will also have to provide sufficient cover should any of the high-end technology be damaged, she notes. “Most of the new luxury vehicles have parking sensors, crash avoidance features, automatic braking systems or even lane departure warning systems. The keys and remotes of these types of vehicles are also incredibly specialised and can be very expensive to replace.”
These types of technologies contribute to overall reduction in risk and consumers seem to be very fond of these tools, but there is a hefty price tag linked to employing the latest technology trends in vehicles, says van Zyl. “When these sensors get damaged, they are expensive to repair and it often requires a whole system recalibration that can only be done by an expert. All vehicle repairers may not necessarily have the expertise in place to do this and the vehicle will have to be sent away to a specialist to have the sensors recalibrated, which results in escalated costs.”
High-end vehicles require specialised insurance underwriting, says van Zyl. “Some insurance providers impose additional restrictions when they cover a luxury vehicle, like nominated drivers, or they exclude younger drivers due to a certain level of driving skills being required to drive these high performance cars. While these might seem like harsh measures, it is imperative to understand that both the client and the insurer’s best interest is taken into account to provide the best cover for the client.”
It is advisable for motorists who own high-end vehicles to ensure that they are not left out of pocket when their car has to be repaired or replaced by ensuring they have a specialised insurance policy in place, concludes van Zyl.