By on November 28, 2016

Bentley Continental GT V8 S

Rising insurance premiums are a plump grape in the cornucopia of adult annoyances, but they grow into a ripe apple when forces outside of your control cause them to skyrocket.

Now, imagine that there’s only one insurance provider, and you already pay taxes towards it. That’s the reality in several provinces north of the border, but one jurisdiction just crashed head-on into an unforeseen problem: new money, and the skyrocketing increase in six-figure vehicle ownership that came with it.

To save the owners of Malibus and Journeys from a major jump in premiums caused by ultra-pricey supercar repairs, one Canadian province has taken drastic steps.

As reported by Automotive News Canada, British Columbia will no longer cover vehicles costing $150,000 or more through its public insurance policy. Anyone who’s ever visited Vancouver knows the reason behind the move.

The city has gradually become a haven for the ultra-rich, including a large contingent of wealthy Chinese families (or the sons and daughters thereof). Ferraris and Bentleys ply the streets like pickups in Iowa. Already, the city has applied a new tax to empty houses to stem the flow of foreign capital that has, in part, sent home prices into the upper stratosphere. A standalone garage could set you back seven figures.

Now, the provincial legislature’s focus has turned to insurance. With every vehicle owner contributing to the same pot, the cash needed to repair the bumpers and body panels of high-end vehicles has become too much for low-end owners to bear. Hence the need for changes at the Insurance Corporation of B.C.

“If owners of high-end luxury cars can afford a high-priced car, they certainly can afford to pay higher premiums to cover the real cost for their repairs,” said Todd Stone, B.C.’s Minister of Transportation and Infrastructure.

In a statement, the government tallied up the cost of repairing a 2015 Bentley Flying Spur W12. Assuming a low-speed collision, the price tag attached to the replacement of a fender, grille, headlight and intercooler comes to $38,000. Car owners in B.C. pay about $1,000 per year for basic coverage. According to government figures, the average collision repair bill for a normal car amounts to $2,500. That figure rises to $13,000 for a high-value” vehicle.

So far this year, B.C. has registered 3,000 vehicles costing $150,000 or more. That’s up 30 percent from three years ago. In total, last year’s public payout for ultra-lux vehicle repair was $2.3 million.

Unfortunately, the changes needed to force high-end car buyers to buy private insurance will move at the blistering speed of government, meaning a stop gap solution comes first. With this in mind, the province will immediately double the basic insurance premium for super high-end vehicles.

[Image: Bentley]

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52 Comments on “High-end Car Registrations Threaten the Dream of Affordable Insurance...”

  • avatar

    I’ve always thought there should be a maximum amount that someone should expect to pay for repairs for expensive repairs. It’s not realistic to expect the average working person to have to pay to fix someone’s Bugatti should he be involved in an accident with one.

    • 0 avatar

      Huh? If you crash into an expensive car, and it’s your fault, you (and your insurer) should be ready to pay up.

      How does this insurance thing work in places like BC, anyway? Do people that own Bentley Mulsannes pay the same rates for collision insurance as people that own Chevrolet Malibus? And if so, why?

      • 0 avatar

        It’s the same as when a billionaire sports team owner makes the taxpayers of a city or state pay for their swanky new sports arena or stadium. Because “they” can.

        The real question should be…do the peasants use 0 weight lube or maybe a 5 or 10 for their screwing? Perhaps it depends on the season. I’d venture to say they mostly go with zero weight lube for a much slippier experience with increased economy.

      • 0 avatar

        “If you crash into an expensive car, and it’s your fault, you (and your insurer) should be ready to pay up.”

        Insurers, maybe, since risk-spreading is quite literally the whole purpose of insurance. But bankrupting an individual because he has the misfortune to run into someone rich instead of someone poor seems incredibly unfair; suppose you trip while walking down the street and spill your coffee on someone. Should you be out thousands of dollars if the coffee-ee happens to be wearing something outlandishly expensive and fragile? I’d say that when you’re the one deciding to drive or wear something several standard deviations outside the norm in a risky environment, a majority of that risk should fall on you or your insurer, not the poor sod who’s in the wrong place at the wrong time.

        The real cost of a $13k repair to a normal or below-average-income person could be crippling quite literally for life, whereas covering the same repair for the Bentley-buyer is probably a minor annoyance. You might be able to make an eye-for-an-eye argument that, well, them’s the breaks, sucks to be you and sucks for your kids – but that’s not really a society I’d like to be living in.

        • 0 avatar

          “Should you be out thousands of dollars if the coffee-ee happens to be wearing something outlandishly expensive and fragile?”

          You may be right, but that’s not how the world works. If you’re crossing the street and a UPS trucks runs the light and kills you your family is going to get the net present value of all your future earnings. If you’re a 32 yo investment banker, that could be 10s of millions. If you make $25k and you’re 60, then it’s a few 100 grand.

      • 0 avatar

        >> If you crash into an expensive car, and it’s your fault, you (and your insurer) should be ready to pay up.

        That’s why I rivet one of my Bob Ross inspired oil paintings onto my back bumper. When I get rear ended, jackpot! My art is work $250,000.01 in pre-1933 Gold Certificates.

      • 0 avatar

        Yes, you should pay up, but there should be a ceiling on how much. If your car is so expensive that it would cost more than, say 200 percent of the average cost of the repair, your insurer pays that 200 percent, and the expensive car’s insurer would be expected to pay the rest. Would that cause rates to go up for Ferrari owners? Yes, but that’s part of owning and expensive car.

      • 0 avatar

        You guys are misunderstanding this change. If you are driving a 500 dollar beater with collision coverage and smack into a Veyron your insurance is on the hook regardless of whether or not it is a “public” plan. That does not change!

        This means that the “public” insurance program will not insure $150,000 or higher luxury vehicles. If you happen to own a car in this bracket you must go with private insurance that is obviously much more expensive than that of the “public” provider.

        Insurance companies whether they be public or private have the right to decide who they insure. They also have the right to charge what the market will bear.

        • 0 avatar

          I understand the change in BC insurance policy, just going a little off topic.

        • 0 avatar

          I’ve insured with ICBC since it came into existence, and I like it. The genuine public preference for ICBC is shown by the fact that even right-wing pro-privatization BC governments have not substantially altered or gotten rid of it.

          Desipte being at least reasonable, rates are artificially high because the government skims hundreds of millions of dollars of artificial profit from it. This goes into general revenue and would have to be obtained through other taxes anyway. Why pay profit to private companies when it can go back to the public?

          I’ve had four insurance events with ICBC. Two as an at-fault motorist and two as an innocent cyclist hit by at-fault motorists. In all cases I felt treated competently and fairly.

      • 0 avatar

        The only way “fault” is determined in civilized society, is a criminal prosecution followed by jury trial and conviction of a criminal violation Beyond Reasonable doubt. Anything less is just a Mickey Mouse racket cooked up to provide welfare to ambulance chasers.

    • 0 avatar

      I have no idea where you are from, and what the insurance laws are in your jurisdiction. In my state, as long as I meet the required minimum, I can purchase an auto insurance policy that will certainly not pay the full costs if I t-bone a Bugatti. When I was younger, it seemed like a safe bet. Now that I own things like my own home and nice-ish cars of my own, it’s not so safe. If I don’t have enough coverage to pay for that Bugatti, their insurance company will cover the difference under an “uninsured/underinsured motorist policy, if purchased by the owned of the Bugatti. And then their insurance company comes after me to recover their loss. I have a similar policy just in case I get t-boned by someone in a clapped out G6 who spent more money on the stereo than car insurance.

  • avatar
    DC Bruce

    Sounds like what would happen with “socialized insurance” that is not priced based on risk of loss. “Risk of loss” being the product of two things: the cost of repair/replacement and the likelihood of a crash. What’s “unfair” about asking owners of six-figure automobiles to pay insurance premiums based on the likelihood of a six-figure loss?

    • 0 avatar

      Saskatchewan’s socialized insurance rates are based on the actual risk of loss for a particular vehicle. But it’s a policy to not discriminate based on age or gender, so a 16-year-old male with a clean record can insure a 2017 Ferrari 488 GTB for $3381 a year, just like anybody else. I don’t imagine they see a lot of claims on high-end vehicles since they’re typically driven infrequently, and usually by mature adults. Unlike Vancouver, there are very few, if any, wealthy foreign high school kids around here.

      Our basic insurance has liability up to $200k, so that covers most situations in an environment with public health care. Bumping it up to $1M while lowering the deductible costs less than $200 a year extra.

      I like the system. I’d prefer they be much harder on those who actually cause damage and harm on the road, but that’s true everywhere in North America.

    • 0 avatar
      Jeff Semenak

      What loss? 3000 cars x 1000/year= 3 Million paid in yearly with 2.3 Million paid out. They made 700k profit each year.

  • avatar

    I’ve never dreamt about insurance.

    I *have* dreamt about running away from hitmen and winding up in a mall hair salon where I went down on a sehr zaftig lady stylist. But not about insurance.

    *Mmmh! Thighs!*

  • avatar

    Why, oh why, are the premiums not based on the value of the car? This is a bit baffling. This insurance won’t cover much in the way of repairs for some rust-covered hooptie, right?

    • 0 avatar

      sirwired – there is some variation based upon the value of the vehicle but it isn’t as great as it would be with a private system. Due to tighter controls on pricing we have the “average” buyer subsidizing the luxury end of the market.

      I don’t know of anyone in British Columbia who loves ICBC (Insurance Corporation of BC). This sort of move to keep costs in line makes sense since the proletariat isn’t going to mind seeing the foreign bourgeoisie get it in the azz. This is in line with legislation placing a 15% tax on foreigners buying homes in Vancouver.

  • avatar

    This is scary to think about. I live in Sarasota where Bentleys and Lamborghinis are common sights. My DD is an older Nissan minivan and I’m covered up to $25K with basic liability. If I accidentally tag a new Lambo on one of our notoriously congested roads, I’m screwed. This person could and would likely sue and wipe out my kids’ college funds over an accident that with any random Malibu or F-150 wouldn’t be a big deal.

    Where’s the legislation to protect people against this scenario? IMO if someone decides to build a mansion on the edge of a cliff, they assume the risk of the thing sliding into the Pacific. If someone decides to drive a $200k car through the McDonalds drive thru and surround themselves with spent Corollas, that should be on them after a certain cost point.

    • 0 avatar

      e30gator – like I said earlier, this doesn’t affect your insurance. You still will be covered if you hit a Lambo. It means the buyer of a high end car (over $150,000) isn’t going to be able to get coverage through the public system.

    • 0 avatar

      The only “protection” you need is to increase your liability coverage limits (not trying to be glib, but it is really not terribly expensive to do so unless you have a lot of points/accidents). With only $25k coverage, hitting something as common as a new Lexus ES or Ford Explorer would cause real pain, let alone an exotic.

      Why would legislation be necessary? Why is the owner of an expensive car (or suit jacket, watch, etc.) any less entitled to be made whole following a loss due to someone else’s negligence simply because he/she is assumed to be in a position to absorb the loss painlessly?

      • 0 avatar

        “Why is the owner of an expensive car (or suit jacket, watch, etc.) any less entitled to be made whole following a loss due to someone else’s negligence simply because he/she is assumed to be in a position to absorb the loss painlessly?”

        Because noone is entitled to be “made whole” by anyone else. Hence, if making A whole costs more than making B whole, it makes all the sense in the world that A would pay more for that service.

    • 0 avatar

      Don’t be a chump. Carry adequate insurance.

      With full sized, domestic brand SUV’s going for $75,000, the state minimums are ridiculous. As soon as my wife and I began to build up assets in our marriage, I took out a $1,000,000 umbrella policy, which also required raising the underlying auto liability levels to $350,000. With an excellent credit profile, it’s not that expensive and carrying everything through one insurer gets me lots of cross-line discounts. I sleep very well at night.

      • 0 avatar

        I wouldn’t sleep well at all with only 350k coverage. I’m in Germany, where obviously things are different, but I’m really rather amazed at just how huge the difference is.

        I just insured my 1991 Citroen BX, a beater by any normal person’s standards (although easily among the top one hundred Citroen BXs left in Germany). I’m covered for up to 100 M€ worth of total damage, 15 M€ per person injured, and 5 M€ of environmental damage per incident. Also, I’m covered for glass and wildlife collision damage, breakdown help, towing costs and such. And it all adds up to a little more than four hundred Euros premium a year.

        (No, my credit record isn’t all that good. You can’t even get less than 50 M€ coverage here. And yes, those are millions of Euros. Really.)

        350k? I can easily imagine mishaps that are much, much more expensive than that. And I don’t even need to deflect a school bus into an oncoming fuel truck to do that — the most expensive single-car, no-person-hurt crash I know of involved a Mercedes sedan crashing into an elevated railway pole in Wuppertal, easily causing seven figures worth of damage (in Deutschmarks of the 1980s, and thus easily in today’s Euros too).

        Yours, Ermel.

  • avatar

    Back in the early 90’s they talked about Government run insurance , in Ontario. It never materialized . We have privately run “no fault” insurance . Your insurance pays the damage , regardless of who is at fault. If your at fault you eat your deductible, and now carry an “at fault” black mark on your premium.

    If you choose to drive a $150 K vehicle , it will most certainly impact your premium.

  • avatar

    Maybe I’m missing something, but as per ICBC’s own statistics, they insure roughly 2.2 million passenger vehicles, so these high end vehicles are costing about a buck per vehicle extra per year (not accounting for the fact that ICBC already calculates premiums based on the vehicle type).

    As much as I’m what Don Cherry would call a “left-wing pinko,” and basically assume every rich person is lab-created amalgamation of Marie Antoinette and Gordon Gecko, I wonder if this is a reactionary measure. The stereotype of the supercar with a learner’s sticker is strong out there, it wouldn’t shock me if there was pressure on ICBC to enact something similar to the tax on foreign real estate investment, so targeting cars over $150k is a meaningless feel-good action.

    • 0 avatar

      Maymar – agree. it is much more likely to be a political ploy to buy votes.

    • 0 avatar

      “every rich person is lab-created amalgamation of Marie Antoinette and Gordon Gecko”

      Marvelous. And maybe toss in some Charlie Sheen.

    • 0 avatar

      As long as you realize that the “leftists” that tell you when and how high to jump are the richest and the most depraved of them all.

      • 0 avatar

        That’s silly. They don’t care if we jump, hop, skip or do demi-pliés.

        • 0 avatar

          Man do I hate ICBC and the complete lack of competition and choice in insurance that comes with it.

          Sure we have private insurers, but you MUST purchase your basic plan from the Government which is the lion’s share, not to mention additional fines and fees for everything.

          • 0 avatar

            Still better than MPI here in Manitoba where we have zero choice at all.

            And just try insuring a motorcycle here. They’ve been waging war on motorcycling for years, to the point where the only people on bikes anymore are old rich guys on Harleys because no one else can afford insurance.

  • avatar

    ICBC sounds like no-fault insurance rather than traditional insurance. If not, has the province declared that an at-fault driver need not pay more than $150,000 toward repair or replacement of a vehicle costing more than that? What happens when the vehicle is a new 18-wheeler and its valuable cargo is part of the loss?

    Since I don’t live in a no-fault state, I’m responsible for the entire cost of an accident that is my fault. If it’s somebody’s beater worth $500, I would most likely write him a check in return for a liability release. If the cost were higher, I would let my insurer pay and eat the resulting increase in premiums. If the cost exceeded the limits of my automobile insurance, my $1,000,000 umbrella liability policy with the same carrier would pay the excess. This year’s premium for the umbrella liability, which covers everything, not just excess automobile claims, was a measly $150.

    • 0 avatar

      ICBC is not “no-fault”. It has a government-granted monopoly on basic (CAD200,000) liability insurance, but competes with private insurers in British Columbia for “excess” liability and “Comprehensive” (collision) insurance. Until the announcement, ICBC would offer excess and collision coverage to Lambo owners, just like Malibu owners. After the announcement, ICBC will no longer offer excess and collision insurance to the Lambo owner. Only private insurers will offer coverage to owners of cars with a sale price in excess of C$150,000 (which could include a heavily loaded Model X). Don’t shed a tear for the 0.1%, they will still get their carbon-fibre fender, and the private insurer will sue the at-fault driver for any deficiency, just like in the good ‘ol US of A!

  • avatar

    Vancouver, per capita, has the highest luxury car sales of any place in North America. Pretty odd for a city with virtually no head offices, but understandable when you realize it’s a haven for shady Chinese money. That’s why there will be no outcry over this insurance change, and why there were few tears shed (other than realtors) when the province slapped the 15% tax on foreign home buyers in Metro Vancouver (after home prices rose 30% year-over-year). You can bet the insurance co ICBC ran the numbers and saw not only were there a lot of accidents involving supercars, but the supercar owners were likely at fault. To wit:

    “Max Yi, 20, showed off his new Aston Martin Rapide S — which cost $270,000 — to Global News, telling the outlet he bought it after crashing his Bentley.

    And there appear to be many young drivers behind the wheel of these luxury cars — which sport tell-tale “N” stickers. The green decals indicate drivers are in the novice second step of B.C.’s graduated licensing program.”

    It’s a cautionary tale for other North American cities of what happens when you allow an influx of unrestricted Chinese money in. Who knows, maybe the US President Elect will actually knock some wind out of the transfer of wealth from North America to Asia.

  • avatar

    “Car owners in B.C. pay about $1,000 per year for basic coverage”

    So this figure is per car or per person?

    • 0 avatar

      Per vehicle, so it does get pricey if you want to insure multiple vehicles simultaneously. It’s not expensive to insure vehicles for storage though, so the people I know with multiple vehicles will only have a couple insured for on-road use at any time. You can easily activate or deactivate the on-road insurance online.

      Secondary vehicles over 30 years old cost something like $120 a year to insure in Saskatchewan, with 200k liability. You need additional insurance if you want to cover the value of the vehicle itself though.

      • 0 avatar

        Thanks for the reply, well that sounds somewhat reasonable. I would prefer a system where the person is insured on anything they own/drive excluding certain exotic things for a lump sum, but can see issues with such a system. Then again in the US, credit is determined by a proprietary Fair Issac algorithm…

        • 0 avatar

          Since that is $1000 CDN (I assume) it’s about $750 USD/year.

          For reference, I pay $960 USD/year to insure my 2011 Mazda3 in a reasonable town in northeastern Massachusetts, and we have state regulated private insurance. I have no speeding tickets or accidents and I’m a thirty-something single male driver with a reasonable liability plan (not the minimum, but not gold plated either). I do have a thousand dollar deductible.

          I could drop collision and save some dough but I won’t do that until my car is completely depreciated.

          If I bought a second car, it would certainly increase my premium, but I don’t know by how much.

  • avatar

    Insurance must be funny in the US. The cheapest 3rd party property insurance here available for avg. cars for something like $250-$300 covers damage up to $20 million dollars.

    Remember you could run into a storefront and incur millions of dollars of damage including to someone’s livelihood.

    Today I learned that basic insurance in the US may not even cover a decent used Hyundai.

  • avatar
    Car Guy

    That’s the byproduct of socialism and government controls. Less choices and ultimately people become poorer because of it. But that’s OK, just keep listening to Trudeau and what a great man Castro was – soon you can become just like the Cubans………

  • avatar

    If you only have one insurance provider, the basic insurance should be “pay at the pump”, and it should be a no-fault system so that if you have a high-priced car, you have to pay separately for a supplement policy.

    For those that talk about free markets yada yada, the markets don’t work when you only have one insurance provider. Secondly, when people talk aobut not wanting to pay for bad drivers – guess what, on average we are average drivers. Speaking as a lawyer, our tort system (and likely Canada’s too) is not very efficient at apportioning financial responsibility for poor driving.

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