By Craig Stoker, Leavitt Group
In December 2011, a Utah man won a Lamborghini valued at over $300,000. He wrecked the brand new “supercar” within less than six hours of receiving the keys.
Luxury cars are not immune to accidents or damage. When it happens, the value involved makes these events more financially and emotionally painful. It is critical to understand that the insurance coverage for luxury cars works differently than the insurance for standard autos.
Often, owners of luxury, exotic, and collectible cars will insure their vehicles with the same insurance company they use to insure their Ford, GMC, Honda, or Toyota. This is a problem because standard auto insurance has gaps that don’t adequately protect luxury cars. The following is a list of differences between standard auto insurance companies and professional auto insurance companies:
Total Loss Coverage
Standard Insurance Company – Once you take the title of a new vehicle, that vehicle is susceptible to a significant amount of depreciation. Most insurers settle a total loss based on the actual cash value after depreciation.
Professional Insurance Company – With a specialty company, you would receive a check for the agreed value of the vehicle, which is higher than the actual cash value. No hassle, no questions. This agreed value is updated at the start of each policy renewal.
Partial Loss Coverage
Standard Insurance Company – Repairs can include used and after-market parts. Additionally, as the car ages and accumulates miles, the cost of repairs can include a factor for depreciation.
Professional Insurance Company – Only Original Manufacturer Parts (OEM) will are used, and depreciation is not a factor regardless of the number of miles or age of the car. Additionally, the insurance company provides a 100% cash settlement option, based on the agreed value, if the loss exceeds 50% of the car’s value.
Standard Insurance Company – Many insurers make you choose from their finite roster of repair facilities.
Professional Insurance Company – The client chooses the shop of their choice, or they can be directed to pre-screened facilities if they prefer.
Standard Insurance Company – Typically, this coverage is limited to $50 per day, not to exceed 30 days.
Professional Insurance Company – This includes protection up to $12,500 with no per-day limit. If you drive a Lamborghini, we expect you would want to rent the same.
Coverage – Injuries
Standard Insurance Company – Most of the time, drivers with standard insurance companies have liability (umbrella) limits less than $5 million. A $5 million max is the industry standard.
Professional Insurance Company – With proper specialty coverage, clients can receive umbrella protection up to $100,000,000.
Remember, there are two costs involved with insurance—first, the cost of the policies themselves. Second, the cost of a claim, such as out-of-pocket expenses, lost time, and frustration. With proper risk management for your luxury vehicles, you can eliminate surprise and have more efficient insurance. High-value assets are vulnerable to risks that you may not know to exist. Do not wait for a claim to find out what is or isn’t protected. Contact your Leavitt Group advisor for a risk analysis to determine if you have the right coverage for your needs.
Contact your Leavitt Group advisor for more information.
The coverages discussed herein are for illustrative purposes only. The terms and conditions of your specific policy may differ from those described. Please consult the provisions of your policy for the terms, conditions, and exclusions that apply to your coverage.