Why Luxury Car Owners Are Avoiding Insurance Policies

AS the economy continues to bite harder, Nigerians are cutting their budgets to cope with the prevailing difficulties.

While many have reduced their standard of living, others have cut down on their ostentatious ways of life. The recent removal of fuel subsidies has not helped matters, as many people now find it difficult to feed and fuel their vehicles.

One of the areas that has been deeply affected is the number of cars that are lying idle in garages. To some, selling them off has become the solution, while others have cut down on the insurance on the cars. Many owners of exotic and luxury cars in Nigeria choose to self-insure such brands of vehicles rather than insure them with reputable insurance companies, as they believe that they are being charged exorbitant premium rates. It might shock you that some big cars in our country today are covered by third party insurance rather than comprehensive insurance.

The vehicle owners feel that this is the only way to save money. But they fail to realise that, in the event of an accident, the consequences are not imagined because they can’t seek help from such insurance companies. Others believe that since they don’t drive the cars often, insuring them will be a waste of money. Vanguard investigations reveal that there has been a drop in the insurance of such cars as their owners have not been keen on insuring them in recent times.

Speaking on the issue, a chief underwriting officer of an insurance company who would not like to be mentioned said: “If the purchase of an exotic or luxury car is financed by a bank, the bank always makes it mandatory for the owner to insure, but when people buy directly on their own, they ignore insurance because the incentive to insure is usually very low. And if they are not in the country, they will just buy and keep them at home, and because they hardly use them, they don’t insure them. However, those who know the law that for every vehicle there must be an insurance cover, are the people that get insurance for their exotic cars.

“As such, the major challenge that the insurance industry always faces with exotic car owners is that they hardly want to pay for insurance. If a bank is financing it, the bank can give them the highest interest rate, and they will oblige, but if insurance is giving them a minimum basic premium rate, they will not want to pay. It is a criminal offence to drive in the country without insurance. Also, any little damage to an exotic car will result in multiple losses. For instance, you will not get the headlamps of these cars in Nigeria because they are usually very expensive. People who have suffered losses in the past with exotic cars always seek to insure them before they discharge them from the point of purchase.”

Another insurance company CEO who spoke on the issue told Vanguard that most owners of exotic and luxury cars believe that taking insurance on such cars is a waste of money. He said: “Some people don’t believe in insurance. They believe that even if something happens, insurance will not pay, which is a big misconception. But that is getting out f the way a little bit because of recent awareness campaigns.”