From the July 2009 issue of Wealth Manager Web • Subscribe!

Drivers' Ed

Exotic cars--sometimes called "super" cars--are rare and magnificent. They outperform ordinary cars in terms of styling, precision, power and price. While their rarity makes exotics similar to traditional "collector" cars, that's where the likeness ends. The Aston Martin Vanquish ($228,000 list), the Saleen S7 ($395,000) and others in their league are not your everyday cars. They aren't even their owners' everyday cars. When spotted on the street, their sleek, otherworldly styling commands attention. As the summer joy-riding season ramps up, these powerful machines will be seen with greater frequency.

Too often, though, this rite of summer comes to a screeching halt. When an owner slips behind the wheel of a six-figure roadster that has spent much of the past year in the garage, a transformation takes place. Cautious suburban driving gives way to reckless abandon. A quick review of accident claims for exotics reveals a number of common denominators. The typical accident involves a single, out-of-control car hitting a stationary object or ending up in a ditch. Later, while trying to explain the accident to police, owners are foggy about what happened. No matter how dry and sunny the weather, the driver's stated reason for losing control always seems to be a wet stretch of asphalt!

This type of rationalizing is common. It's human nature to blame someone or something else rather than oneself for unfortunate mistakes--especially when you have just totaled a fantastically expensive automobile. In light of these amateur race car driver tendencies, it makes sense to consider the serious loss exposures inherent in exotic ownership before accidents happen.

For example, a fender bender involving a Lamborghini Diablo or Ferrari Enzo never leaves merely an inexpensive dent. Like many European exotics, these models feature super-strong, ultra-light, carbon-fiber construction. Hoods and chassis made of the polymer can cost $30,000 and $70,000, respectively, plus shipping costs from an overseas manufacturer. Conservatively, owners of exotics should count on repairs costing 10 times those of an ordinary car; ideally, the damaged Enzo should be shipped back to Maranello, Italy, for repairs at the Ferrari factory. Given these high costs, owners appreciate insurers that do not micromanage decisions about the shop or parts to be used. And since the most popular limited-run cars can nearly double in resale price before their model-year ends, a policy that insures to "agreed value," rather than a depreciated amount, is prudent.

The good news is that most driver inexperience or rustiness can be mitigated. Drivers should understand that the way an exotic car rides is drastically different from your everyday vehicle. The greater its precision handling and horsepower, the less margin of error there will be in turning radius, acceleration and braking. This is why a feel for the road must be developed in the crucial first minutes--not pursued as an afterthought while adjusting radio settings at 65 mph.

Not surprisingly, unfamiliarity and overconfidence increase the odds of an accident in the first months of owning an exotic car. The problem is that new drivers of exotic cars seek that rubber-burning slippage gained by leaving the traction-control settings off. This explains why claims adjusters often report these controls disabled when examining a wrecked exotic. Drivers need to learn (and hopefully not the hard way) that a looser pavement grip is a lot more dangerous in a super-charged coupe than in the prestige sedans or upper-end SUVs they drive most days. The best thing that a neophyte exotic car driver can do to avoid destroying the new toy is to attend a driving school with professional instruction before taking the car out for a solo spin.

The care drivers take in maintaining the vehicle also matters a great deal. The car must be kept in optimal working condition--as much for safety as for performance. The road-hugging tires on most exotics contain softer compounds than typical tires, giving them extra "grip" on asphalt. However, that gives them one-quarter the life of a standard tread. Owners can't expect much longevity from their brakes, either. Even if the car logs under 2,000 miles yearly and most of that in fair weather, an overwhelming amount of that driving will be a thrill-seeking mix of full throttle and hard stop. And alternatives for reducing the wear don't come cheap--longer-lasting ceramic brake pads can cost $50,000.

Whatever the service schedule and parts requirements, the car's maintenance guidelines must be strictly followed. This usually isn't an immediate concern for exotic owners. If you can bankroll a car of this caliber, you probably employ household caretakers who are responsible for routine vehicle care. Thus, there's no great worry of an exotic car falling into disrepair, provided the caretakers get them into the shop regularly. But some owners also enjoy playing amateur mechanic. By taking on even minor upkeep themselves, weekend grease monkeys could be unknowingly assuming major risk. At a minimum, they might be shifting tens-of-thousands of dollars in mechanical liability away from a warranty and onto themselves. Worst case: A small mistake could result in mechanical and handling problems that lead to an accident in which others are seriously injured.

When exploring maintenance options, the exotic car owner should send newer, under-warranty vehicles to an appropriate dealership or specialty shop. However, regardless of age or warranty, caretakers should carefully vet garage crews. What relevant training and experience do the mechanics have to service an exotic? Are there special bona fides, like Formula One pit crew experience? Ideally, exotic car technicians should have Automotive Service Excellence (ASE) certification. Referrals can also play a role in selecting the right service option. Whether looking to maintain a Jaguar XKR 100 or the Mercedes you drive every day, it pays to know somebody who drives the same make and model and can recommend a great mechanic.

Exotic car owners can enjoy their rides, but they should remember that hazards lie ahead for the naive. The rules of physics still apply to exotic cars, even though it sometimes may not seem that way as drivers maneuver their powerful machines around hairpin turns and go from 0 to 60 in the blink of an eye.

Andrew McElwee (amcelwee@chubb.com) is executive vice president of Chubb & Son and chief operating officer of Chubb Personal Insurance.

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