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Do rich people buy car insurance?

Best Insurance Companies For
High Net Worth Individuals

EK Insurance

Discover what the best insurance companies for high net worth individuals are. The personal insurance needs of high net-worth families differ from those of most people — as they have so much more to lose — from both a liability & property standpoint.»

Best Insurance Companies For High Net Worth Individuals

Best Insurance Companies For High Net Worth Individuals

Whether you are an executive, you have built your own business from the ground up, or you have inherited a large amount of money, if you have a high net-worth, you know that you are fortunate enough to have a lot of options available to you.

However, though many people assume that people who have a lot of money have the «easy life», there are many risks and challenges that the wealthy can face — one of them being choosing an insurance provider.

While there are so many insurance companies out there and you could certainly choose to work with any of them, you want to ensure that you and your net-worth are well protected. Unfortunately, there are not a lot of insurance companies that specialize and understand the personal insurance needs of high net worth families.

A large percentage of high net worth families are underinsured and/or they have their insurance with a company who does not offer the limits of protection needed and the ability to properly value expensive properties. Over the last few decades, the size of liability judgements and frequency of lawsuits have been increasing.

So which insurance companies know what they are doing and will provide you and your loved ones with the proper coverage in the event of a property loss or a liability claim? Keep on reading to find out which companies offer the best home, auto, and life insurance coverage for individuals who have a high net-worth.

The Best Homeowners Insurance For High Net-Worth Families

The last thing you want is for someone to slip and fall on your property and file a huge liability claim against you and not have the proper coverage, for example. So, what insurance providers offer the best homeowners insurance for someone of your financial status?

Carriers like AIG Insurance, The Chubb Group, Pure Insurance and The Horton Group offer outstanding homeowners insurance policies for high net-worth individuals. Some of the benefits of having the above mentioned insurance carriers cover your home an vacation homes include the following:

  • Complimentary Appraisals — With these insurance carriers, there is a very good chance that you will receive a complimentary appraisal of your home in order to ensure that the right estimate for replacement cost is used when your home is insured.
  • Extended Replacement Cost — In the event that your home is completely destroyed by an act of nature, often times, the amount offered by an insurance policy to replace your home won’t be enough. Extended replacement insurance ensures that your carrier will cover any additional expenses above your homeowner’s policy limit.
  • Ordinance and Law coverage — The cost to bring your home up to code is not often provided with a standard homeowners insurance policy, which may only offer 10% of the dwelling insurance amount, and must be covered separately by ordinance and law coverage. Local building codes change frequently, so in the event of a large loss like a fire, when the house is rebuilt it will need to be rebuilt to current code standards.
  • Excess Liability Add On — If you’re found at fault for an injury on your property, then the other party may come after your personal assets. Having an excess liability or umbrella policy can help pay for legal fees and any damage awards so you don’t have to sell your assets to pay the judgement.
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Most families do not start out as high net worth unless they had an inheritance. So like most people the buy their insurance from GEICO, Progressive, State Farm, Allstate, Farmers & Nationwide. The problem starts when their assets, properties and wealth starts to outgrow these companies — and they don’t update their policies to fit their growing needs.

Most of the standard insurance companies do not have the right products or coverage amounts to fit the needs of a high net worth households. For example; On their homeowners polices the replacement cost estimators are meant for homes not exceeding $500,000 in value. So if they insure a home where the replacement cost is higher, the property is usually underinsured and the premiums are typically higher. These property policies don’t offer broad enough coverage, and believe it or not — typically cost as much or more than a proper high net-worth policy.

It is common to find significant coverage gaps when a high value home or family is not protected by a company that specializes in wealthy family protection. The main reason for this is that standard insurance companies do not have specialized high net worth insurance products, including underwriters and claims adjusters who specialize in high value property.

Best Auto Insurance Providers For High Networth Individuals

Whether you own a few or an entire fleet of high-value vehicles, in the event that any of them are damaged in an accident or as a result of a storm or an act of vandalism, you want to make sure that the damages are fully covered to either repair or replace the vehicle.

There are several insurance carriers that offer comprehensive auto insurance coverage for high net worth individuals. Among the best include AIG Insurance, ACE Group, and The Chubb Group. Some of the benefits these carriers offer wealthy people include:

  • Rental car coverage worldwide. If you need coverage for a rental throughout the US or abroad, these carriers will extend that coverage.
  • Agreed value coverage. You’ll find out the exact settlement value of your vehicle as soon as you obtain your insurance coverage.
  • Original equipment manufacturer parts. If your vehicle needs repairs, these providers will cover the cost of parts from the original manufacturer.
  • Umbrella — If you’re found at fault for causing an injury when driving then the other party may come after your personal assets. Having an excess liability or umbrella policy can help pay for any pain and suffering or medical bills if you are sued.

The Best Life Insurance For High Net Worth Individuals

In the event that you pass away, you want to ensure that your family is provided for, which is why having a comprehensive life insurance policy is so important. Life insurance can help transfer your wealth upon your passing. It can also be used to pay off your mortgage, send your children to college, pay off loans and estate taxes — so that your family isn’t forced to sell the assets you built up over your lifetime to pay debts and tax bills.

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Some of the best life insurance companies for wealth people include MassMutual, Prudential, and Pacific Life. These carriers provide life insurance policies with a high death benefit and will make sure that the process of receiving coverage is seamless and as easy as possible.

Best Insurance Companies For High Net Worth Individuals — The Bottom Line

We hope this article on best insurance companies for high net worth individuals has been informative. If you are part of a high net-worth family and you are shopping around for auto, home, vacation home, valuables and/or life insurance, the companies mentioned above are decent options to consider, as they will ensure that your assets are well protected. Top high net worth insurance companies, high net worth insurance carriers, high net worth insurance market share, high net worth insurance brokers, insurance for high networth individuals, high net worth homeowners insurance & high net worth home insurance.

High Net Worth Insurance Information

EK Insurance advises our affluent clients on what coverage options are available to them. Please check out more of our articles on insurance choices for wealthy families:

  • High Net Worth Homeowners Insurance
  • High Net Worth Personal Lines Insurance
  • Kidnap, Ransom And Extortion Insurance
  • Chubb High Net Worth Insurance
  • Chubb vs PURE Insurance
  • PURE High Net Worth Insurance

EK Insurance » High Net Worth » Best Insurance Companies For High Net Worth Individuals

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Bad Driver? That’s OK — If You’re Rich

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In its new study of car insurance rates, the Consumer Federation of America reports that lower-income people pay higher premiums, even if their driving is better than that of their rich neighbors.

The report, which is the CFA’s third on car insurance premiums, features a mystery-shopping experiment conducted over 12 cities with the nation’s five biggest insurers. Rates were requested for two hypothetical customers: one with a master’s degree and an executive job, the other a receptionist with a high school education. Two-thirds of the time, the wealthy executive was offered a better rate than the middle-class customer — even though the “executive” had caused a car crash and the “receptionist” had a clean driving record.

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The new study builds on the premise established by previous CFA reports: Poor people are charged higher rates for car insurance. Insurance companies say there are legitimate reasons why this is so. Yet when the watchdog group dug deeper, it found that this discrepancy couldn’t be explained away by the fact that people with lower incomes might live in areas where they’d be more at risk of a break-in, do more driving than their wealthier counterparts, or even have lower credit scores. (The use of credit scores as a predictor of driving risk is a separate issue, and a few states have banned the practice.)

“It confirmed what we were beginning to suspect,” says Bob Hunter, the CFA’s director of insurance. “Non-driving related factors can be much more important than accidents and driving-related factors.”

For the CFA’s mystery-shopping study, it made both the “executive” and the “receptionist” 30-year-old owners of 2002 Honda Civics on which they each put 7,500 miles a year. Both hypothetical owners lived in the same zip codes, too; for all cities, the CFA selected zip codes with a median income of about $50,000.

Not all of the five insurance companies — Allstate, Farmers, Geico, Progressive, and State Farm — treated the executive and the receptionist the same way. “In every case Farmers, GEICO, and Progressive quoted the safe driver a higher premium than the driver causing an accident,” the report says, or it refused to offer them a quote entirely. “On the other hand, in all 12 cities State Farm charged the good driver less.”

Insurance companies aren’t supposed to base their decisions on how much money you make — or what race or religion you are, for that matter — but Hunter says that education and occupation essentially are proxies for income. Robert Hartwig, president and economist for the Insurance Information Institute, an industry trade group, says state-level oversight of the industry is sufficient to make sure discrimination doesn’t take place, but Hunter says only 13 states have to pre-approve the criteria insurers use in their evaluations, and charges that enforcement efforts are weak.

Some regulators have thought so, too. “While the use of race as a rating factor was outlawed in Florida, the two factors mentioned above, occupation and education, have emerged in the rating and underwriting of auto insurance and appear to be highly correlated to race and income level,” Florida Insurance Regulation Commissioner Kevin McCarty wrote in a 2007 report. “The industry’s denial of knowing about the statistical correlations between education, occupation, and race and/or income strained credulity.”

Dismissing the CFA’s study as “a press release,” Hartwig says the sample size — 60 scenarios — is too small to be meaningful given the 190 million insured cars in the country. Insurers’ only goal is to price according to a customer’s risk level, he says. “The fact is, the insurer believes this is the right price for both of these individuals,” he says of the CFA’s mystery-shopping experiment.

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Hartwig points out that there is one difference between the two hypothetical customers — a 45-day lapse in coverage — which could account for higher rates for the receptionist. This is true: A study published in 2011 by Insurance.com found that people who let their car insurance lapse paid an average of 5.7% more for coverage. But the CFA found that in more than 60% of the instances where the receptionist got a higher quote than the executive, the receptionist was quoted a rate more than 25% higher than the executive — a much bigger discrepancy than a lapse in coverage alone would seem to account for.

So, what would an insurance company have to gain by charging a safe but poor driver more for the same coverage? Hunter speculates there could be a business motive at work. “We know they are interested more and more in multi-lining as the best way to get revenue,” he says. “Auto insurance is a foot in the door, and we think they’re much more interested in attracting higher-income people than lower-income people.” Rich people might also buy homeowners or life insurance policies, products that could be a harder sell to someone living on a tighter budget — and who might not own a home.

There’s no denying that big insurers are interested in cross-selling and offering policy bundles to their customers. Executives have discussed it as a business driver in investor conference calls when they report quarterly earnings, and there’s a clear financial incentive, according to J.D. Power and Associates’ 2012 National Homeowners Insurance Study. “The retention rate among customers who bundle their homeowners and auto policies is significantly higher (95%) when compared to customers who purchase auto and homeowners with different insurers (83%),” it says.

Hartwig calls this theory “completely untrue,” but Hunter is unconvinced.

“I think it’s market driven, not actuarily driven,” he says.

Do Billionaires Need Car Insurance?

It’s a well-known fact that if you have a car, you should have car insurance, but does this rule apply to billionaires?

Regardless of how much money a person has, it’s usually a legal requirement to have some form of car insurance if you’re driving on the road. There are a few exceptions, but even a billionaire like Bill Gates will need car insurance.

Read on to learn more about car insurance, the rules behind it, and how much it costs to insure the car of a billionaire.

Expensive Car, Expensive Insurance

In the United States, it’s a legal requirement to have car insurance on your road vehicle, with just two exceptions. In New Hampshire, you can opt-out of car insurance, but you must be able to prove financial responsibility – this is where billionaires would fare quite well.

Also, in Virginia, you can venture out as an uninsured driver, so long as you pay the state a fee of five hundred dollars per year. However, this doesn’t mean you get any kind of protection, and you’re still liable should you end up crashing your vehicle.

With that information in mind, it isn’t too hard to understand why even a billionaire would need auto insurance when they’re on the road. They might have one hundred billion dollars, but they still need to conform to the law.

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Although, yes, there’s a great chance that, somewhat bizarrely, the person who owns the insurance policy might have more money than the company they’ve obtained it from. That’s just a fact of life and it doesn’t distract from the fact that they do need it.

If you’re a super-rich billionaire, you’re almost definitely going to drive a luxurious and powerful supercar. With these vehicles, you’ll need to get car insurance from a specialist provider, and your premium is going to be considerably expensive.

Of course, that’s not an issue for a billionaire, who could probably buy out their insurance company if they so desired. According to valuepenguin.com, the average insurance cost on a Lamborghini Aventador was $7,949 per year, in 2018.

This is more than three times the average cost to insure a standard, affordable family car or hatchback. In 2019, the top two most expensive cars to insure, on average, were both Tesla models, which is a favored manufacturer for the rich and famous.

Ultimately, it’s a bit of a moot point, as a billionaire would happily pay tens of thousands of dollars on insurance and not lose any sleep over it. If they’re spending half a million dollars on a car, another ten thousand dollars a year isn’t any big deal.

The Benefits Of The Rich And The Famous

It might seem counterintuitive, but if you’re a super-rich billionaire, you’ll enjoy lower insurance premiums – even on a supercar. This is because most billionaires tend to be working professionals, intelligent, sensible, and residing in nicer, safer parts of the world.

If a totally average person went out to find car insurance on their newly-purchased LaFerrari, they’d have a hard time finding a sensible premium. In fact, they’d have a hard time finding a premium at all, as insurance companies do take a big risk offering protection to such people.

Reportedly, there are more than a few bonuses for the super-rich when it comes to insurance and motor ownership. For example, a billionaire can afford original parts if they’re in an accident, while the average driver might have to settle for cheaper, aftermarket parts.

If you’re insured with a high-end provider, your options for repair shops are much more open, with some letting you take your vehicle wherever you so desire. Conversely, the more run-of-the-mill providers will have specific repair shops that you must take your vehicle to, regardless of how good they are.

Furthermore, if a super-rich billionaire is involved in a car crash that totally destroys their vehicle, they’re almost certainly going to have a backup available. If not, they can waltz into a rental office and take the best car they have, no questions asked.

Alternatively, if their car is truly destroyed, they can likely have a new one delivered before the day is out. These options are almost totally out of reach of the average car owner, adding another layer to the benefits of being a billionaire.

Ultimately, all these benefits and stacks of cash mean nothing where the law is concerned, and these super-rich individuals will still need car insurance.

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