Luxury Car Insurance

Luxury Auto Insurance in Puerto Rico

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The luxury car market in Puerto Rico is very strong and varied, but also unique and this uniqueness presents several challenges and considerations that should be taken into account when thinking about how to insure these vehicles. In this article, we will discuss some of the differences and how they should be handled.

Is there anything different about insuring a luxury vehicle in Puerto Rico versus a regular vehicle?

Yes! Puerto Rican insurance companies have their own processes and idiosyncrasies that often differ from their US counterparts, which makes for a market that operates differently from that of the mainland. We list here just a few of the aspects that make insuring a luxury vehicle

  • One of the main differences is that many of the car insurance companies in Puerto Rico do not hold risk on their books for cars worth more than $100,000. What this means in practice is that often insurance companies will charge an additional reinsurance premium for the cost of reinsuring that risk of the value of the car in excess of the $100,000. This means that premiums do not scale linearly with the value of the car, i.e. a  $120,000 car policy will not cost twice what a $60,000 car policy costs, it will likely cost more because of the reinsurance premium. 
  • The very top of the market cars such as Ferraris, Lamborghinis and other $300k + cars are very difficult to insure. This is due to many factors, but mainly these are just very high risk policies that most insurance companies on the island do not want to write. There are also all kinds of complications with repairing these ultraluxury vehicles in Puerto Rico which can result in very expensive repair costs for even the most minor of repairs. Often, the way to get these insured is to bundle some “good business” with the insurance company, usually in the form of substantial property or commercial insurance.

What is the best car insurance for luxury cars in Puerto Rico? 

This will depend entirely on the vehicle, the driver, and what other business, if any, the driver has with any existing insurance companies in Puerto Rico. There is no one size fits all answer for this. If you have a luxury car that you are looking to insure, we encourage you to contact us for a quote and we will use our experience to determine which company we believe will provide you with the best rates.

How do taxes work for luxury cars in Puerto Rico?

As you may have already noticed if you have spent any amount of time looking at the auto industry in Puerto Rico, the prices of vehicles are generally much higher than anywhere on the mainland. This is almost entirely due to the very high import taxes that Puerto Rico imposes on any incoming vehicles. You can check out the full tax rate schedule on Hacienda’s website here, but you can see that every dollar in excess of $44,890 is taxed at a whopping rate of 34%.

There are some exemptions for these vehicle taxes, the most popular and notable being the complete exemption on fully electric vehicles. Teslas and other fully electric vehicles pay 0% import tax.

How do I go about purchasing insurance for my luxury auto?

You can contact the insurance companies directly, or you can use brokers such as us to contact various insurance companies for you. The benefits of using a broker are multiple: they can reach out to various insurance companies on your behalf, and they can also serve as your liaison whenever you have a claim or need to make changes to your insurance companies. Brokers get paid on commission by the insurance companies, so you do not need to worry about paying additional fees to them.