Who is a high-net-worth individual? Why does a high-net-worth individual require corresponding high-net-worth auto insurance?
An individual with a high net worth has more to lose from accidents, especially when they are the at-fault driver. A low-net-worth individual may declare bankruptcy after liquidating all assets for payment of claims. On the other hand, the high-net-worth individual’s assets can cover liability and they will pay out of pocket. High-net-worth insurance thus provides proper cover for individuals with high net worth.
Here is what you need to know about high-net-worth auto insurance policies.
Subject of Greater Scrutiny
Usually, high-net-worth individuals are subject to public scrutiny after an accident. For instance, if an NBA player is driving home drunk and hits and injures a pedestrian, that pedestrian (and his lawyer) may treat this situation differently than if he was hit by a drunk driver who made minimum wage. The NBA star has more to lose because he has more assets to target in a lawsuit.
High-Net-Worth Insurance Limits
High-net-worth individuals do not have a specific amount of liability insurance recommended to them. They will consider their financial stand and aversion to risk, then decide on the right car insurance for their needs. For instance, car insurance can raise liability limits as high as $2 to $5 million, bodily injury liability limits of $2 million, and property damage liability limits of $500,000.
Uniqueness of the Umbrella Policy
With umbrella coverage, you can raise your liability limits by a considerable amount compared to an average auto insurance policy. For instance, umbrella coverage can easily add millions of dollars to your liability coverage, ensuring you stay protected against a wider range of circumstances. Umbrella coverage is popular among high-net-worth individuals.
Other Important Things to Consider
Higher Deductibles: Higher-end insurance policies typically have higher deductibles (over $1,000). This keeps costs reasonable, but it also means the policyholder is “self-insuring” many smaller claims. If your passenger door is dinged and has $900 in damages, it’s not worth making a claim and is paid for out of pocket.
Higher Rental Car Reimbursement: With their car in the auto shop, a high-net-worth person may not consider a Ford Fiesta for their rental car. Their higher rental car reimbursement coverage allows a comparable rental vehicle to use during the repairs.
Stated Value Clauses: Some higher-end auto insurance policies have stated value clauses. With a stated value clause, the driver and the insurance company agree on the stated value of a vehicle. If the car is declared a total loss, then the insurance pays this amount instead of the current market value.
High-net-worth insurance comes with its peculiarities and unique benefits. If you want to learn more about auto insurance policies for high-net-worth individuals , contact the experts at Weeks & Associates Insurance Services in Thousand Oaks, California. We are ready to assist you with all your coverage needs today.