Do Rich People Need Car Insurance? [A Closer Look]
You’ve likely heard the phrase rich people have expensive taste, but do they also have expensive insurance? More specifically, do rich people need car insurance? If you have to ask that question, then you probably don’t make enough money to even consider purchasing a luxury car.
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If you do, however, here’s what you need to know about insurance for rich people and their expensive toys.
Here is a break down of what we will be covering today.
Do Rich People Need Car Insurance?
The answer is no, rich people don’t need car insurance. But that doesn’t mean they don’t have it.
The cost of owning a car is an expense for anyone, regardless of their income level. However, there are some costs that are more expensive for the wealthy such as car insurance premiums.
The average cost of car insurance in the US is $1,500 per year and this can be difficult to afford if you’re a high-income earner with no dependents to claim on your policy.
If you’re a high-income earner with no dependents to claim on your policy then it’s still worth your while to purchase car insurance because it can provide peace of mind in case something happens to your vehicle or someone else’s property when you’re behind the wheel.
The Importance of Car Insurance
Car insurance is a great idea for anyone who owns a car, but it’s especially important for those with higher net worth. Why? Well, there are several reasons.
One of them is that you’re probably more likely to own multiple cars or expensive cars than others and they’ll require more coverage than a cheaper vehicle in an accident situation — which could impact your ability to afford insurance if you don’t have appropriate coverage already set up.
Another reason is that you’ll probably have a higher net worth than other drivers and can stand to lose more if there’s damage caused in an accident or any sort of lawsuit that comes from it.
How Do Car Insurances Work?
Almost every state requires drivers to purchase auto insurance, but many people are still confused about how it all works and what’s covered by their policy.
The exact details of car insurance policies can vary from one state to another, but there are some features that tend to be common across most states in America.
For example, liability coverage is usually mandatory for all states (except for New Hampshire). If you’re involved in an accident in a car you own, liability coverage kicks in and pays for your damages if you were at fault for causing the accident – or pays for other people’s damages if they were at fault.
The Best Types of Coverage For Your Situation.
If you are a car owner and have just bought a new car, you might be wondering what is the best type of coverage for your situation.
There are three main types of coverage that you might want to consider: liability coverage, comprehensive coverage, and collision coverage.
Liability insurance will cover any damages that you may cause to someone else’s property or person.
Comprehensive insurance is meant to cover all damages to your own vehicle as well as any damage caused by an incident with an animal or object.
Collision insurance covers the cost of repairing or replacing your vehicle when it gets damaged in an accident.
Top 5 Reasons Why Rich People Don’t Need Car Insurance
Reason #1 – No Accidents for a Decade
It’s a combination of factors, but one reason why rich people don’t need car insurance is that they haven’t had an accident in a decade, and they certainly aren’t going to be involved in an accident now.
The longer you go without getting into a serious car crash, the lower your rates will be when you decide to finally insure yourself as an adult.
Reason #2- Coverage is Overpriced
It’s true that richer people tend to have more expensive cars, but coverage prices can also be impacted by where you live and what type of car you drive—even if you’re rich. (Maybe your Bentley isn’t as luxurious as other high-end models, or maybe it’s way older.)
Studies have shown that people who live in areas with higher concentrations of luxury cars tend to pay more for their coverage than those who don’t.
And while certain brands may be viewed as more valuable, insurance companies will often factor in popularity when setting premiums: If a brand is trending up, rates could go up too; if a model is considered safer, prices could come down because of it.
Reason #3 – Your Homeowner’s Insurance will Cover it
Most homeowner’s insurance policies will cover cars that are being stored in a garage or driveway.
That means a lot of well-off people don’t need to buy additional car insurance, but it also means they could be vulnerable to having their pricey car stolen by someone with less expensive coverage—which is why it’s worth paying for some form of collision and comprehensive protection, no matter how expensive your vehicle is.
If you own a really high-end car that doesn’t fit in your garage or can’t be left on its own for any length of time, it might make sense to get added theft protection from your insurer even if you’re getting comprehensive coverage from your homeowner’s policy as well.
Reason #4- You Have Other Vehicles to Protect
With that said, one of the reasons rich people don’t need car insurance is because they already have more than one vehicle to protect.
No matter how expensive your other cars are, it’s likely that they’re still worth less than a Lamborghini or Ferrari; so if you were to wreck either of those vehicles, it wouldn’t cost nearly as much to repair as a regular policy would (and rich people can afford to pay out-of-pocket).
If you don’t have another car to replace what you’ve wrecked and don’t want to be in debt just in case something bad happens, then getting separate policies for all your vehicles might be for you.
Reason #5 – You can Afford the Cost of Repair or Replacement on Your Own
Whether you can afford to replace or repair the car on your own can make a big difference on whether or not you need car insurance for a luxury vehicle.
One way to tell if you can bear the cost of a major accident is if you have savings that can be tapped into in an emergency situation (another reason why it’s important to keep some cash saved up).
If there’s no one close by who can help (family or friends), see if any of your assets are liquid enough to pay for a loan or additional insurance costs; looking at credit card limits, stocks, bonds and other investments should give you an idea of where you stand before getting hit with sky-high bills after a crash.
How to Save Money on Car Insurance for the Rich
Car insurance for the rich seems like a tough nut to crack, but it doesn’t have to be! If you’re making six figures or more per year and drive a luxury car, chances are you could save yourself a good chunk of change on car insurance each year just by doing a little research—and that’s no exaggeration.
In fact, many insurance companies offer an instant discount for people with assets over $1 million, which is one of the best examples of how to save money on car insurance for the rich we can think of.
In the UK, there is an option to make an annual security of £15,000 to be used in place of insurance. However, so few people have ever made use of this option that the British Government is looking into whether it is still worth continuing this program.
How to Get Free Car Insurance if You’re Wealthy or High Net Worth Individual
If you have high net worth, or have a substantial sum of cash on hand, you may think that getting car insurance would be a bit difficult for you.
And well, you’re partially right; getting coverage if you have high risk factors could be tricky – but it doesn’t mean that it’s impossible to get free car insurance for wealthy individuals and high net worth individuals like yourself.
The good news is that some insurers offer special free car insurance packages for certain high net worth clients with no driving violations in their history!
Can A Richer Person Get Cheaper Car Insurance Than a Poorer Person?
This logic is a bit of a double-edged sword: Obviously, if two people have similar driving histories, you might expect them to get similar car insurance quotes–which would make sense based on what we already know about how your car insurance works.
But that isn’t always true–your risk factors actually matter more than your wealth status when it comes to determining what you pay for auto insurance.
A person with a higher net worth may be able to afford better coverage and/or safer cars, which can raise their rates; whereas a poorer driver might find cheaper coverage by settling for liability-only or buying a less expensive vehicle that’s inherently safer in an accident–meaning their rates could actually be lower than someone wealthier than them.
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