BUSINESS NEWS - If you happen to get a financial windfall, like winning the lottery, inheritance or are a high-net-worth individual, there are important insurance factors you should consider before starting a car collection or spoiling yourself with an exceptionally high valued vehicle.

Theunis Fourie, Head of FNB Insurance Brokers, says high valued and performance vehicles can range from antiques and classics to full spec SUV’s and luxury sports cars which can cost up to R7 million and more.

“When covering assets of this nature it is advisable to consult a knowledgeable and experienced broker to avoid making costly mistakes, due to the complexity of insuring highly valuable and unusual assets,” says Fourie.

He shares five factors to consider when insuring a high valued vehicle:

• Re-insurance - ensure that your broker has the appropriate relationships with blue chip insurers to cover the expensive car.

Some insurers have re-insurance limits which may prevent a broker from placing the vehicle on cover directly.

As a result, the broker may need to source alternative products and quotes to accommodate your request.

• Underwriting limits - insurers may consider the value and performance of the vehicle and limit who is insured to drive, mileage per annum, security devices used and the location where it is parked at night - amongst other limits, depending on what the car is used for.
• Premium pricing - insurers will often rate you according to value of the vehicle, type of vehicle, cost of re-insurance, availability of parts if the vehicle is an import, as well as your risk profile.
• Excesses – a 5% excess when claiming could cost a fortune if you write off a car worth R5 million.

Consider flat excesses so that you are aware of what you are in for in the event of a claim. In some cases, selecting a voluntary excess could reduce your premium considerably. 

However, insurers generally provide their lowest rate to clients with a low loss ratio and a voluntary excess may not provide the reduction you hoped for.

• Risk management - be a risk adverse owner and follow all restrictions laid out by your broker. Also be a careful and defensive driver, taking into account that almost 70% of cars on the road are uninsured.

“Depending on the type of car and what you intend to use it for, your broker will be best suited to advise you on all the factors to consider, fine print, and other restrictions you may need to be aware of. 

"For example, measures to follow when taking the car out of the country, attending track days or car shows,” concludes Fourie.

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