Why is $100k the Highest Property Damage Coverage? What if Someone Totals a $400,000 Lamborghini?

[badkitty]

I remember watching a news report about someone crashing into
a $400,000 Lamborghini near New York City. The Lambo was
a total loss. Since most auto insurance policies have a $100k
property damage limit, how will the at-fault drive afford to pay
back the rest of the $300,000?(give or take a few bucks)

 

[theoneagent]

I remember watching a news report about someone crashing into
a $400,000 Lamborghini near New York City. The Lambo was
a total loss. Since most auto insurance policies have a $100k
property damage limit, how will the at-fault drive afford to pay
back the rest of the $300,000?(give or take a few bucks)

High end policies do exist, just have to find them. Chubb comes to mind.

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The other answer, if you get hit by an at fault person, their coverage pays what it has too. Then collision pays the rest a long as it is on your policy.

 

[VolAgent]

I have a strong suspicion that anyone who owns a high end car such as a Lamborghini already had this discussion with their agent, just from the other side. Or more likely, the agent explained it to their personal assistant.

The "Blood from a Turnip Defense" is pretty much unbeatable. So I'm sure if at all possible, the owner has coverage in place to make up for whatever is lacking from the at-fault's driver in property damage. Or at least the agent has on record his recommendation to get it and the Lamborghini owner declining it.

 

[badkitty]

I have a strong suspicion that anyone who owns a high end car such as a Lamborghini already had this discussion with their agent, just from the other side. Or more likely, the agent explained it to their personal assistant.

The "Blood from a Turnip Defense" is pretty much unbeatable. So I'm sure if at all possible, the owner has coverage in place to make up for whatever is lacking from the at-fault's driver in property damage. Or at least the agent has on record his recommendation to get it and the Lamborghini owner declining it.

Even if the owner carries such coverage, the insurance will still go after the
at-fault driver for the recover the remaining $300,000, no?

 

[VolAgent]

Even if the owner carries such coverage, the insurance will still go after the
at-fault driver for the recover the remaining $300,000, no?

Again, "Blood from a Turnip Defense".

For the average American, you would have to sell their home and liquidate their 401k to even get close to $300,000. Home equity is coming up finally as home prices rise, but much of America is underwater. So even if you sold the home, you wouldn't get anything after the bank recovered the mortgage.

And that is if you can even do it. 401ks are protected from creditors and many states likewise offer some level of protection for the primary residence.

So sure, the insurance company can go get a judgement they will never be able to collect on for any meaningful amount. They also will probably get a black eye PR wise. Maybe if it was a niche company that didn't care about public opinion in general, only within their niche. I couldn't imagine a larger insurer going for the judgement if there was any sense at all it would attract media or social media attention.

 

[moonlightandmargaritas]

I remember watching a news report about someone crashing into
a $400,000 Lamborghini near New York City. The Lambo was
a total loss. Since most auto insurance policies have a $100k
property damage limit, how will the at-fault drive afford to pay
back the rest of the $300,000?(give or take a few bucks)

Sounds like a good commercial for a $1,000,000 umbrella...

 

[theoneagent]

No, bad kitty was talking property damage only, so umbrella wouldn't work in this loss.

 

[djs]

Even if the owner carries such coverage, the insurance will still go after the
at-fault driver for the recover the remaining $300,000, no?

Not usually, or if it does, not significantly. Premium changes for accidents are based on at-fault accidents, not claims.

You might lose a claims free discount, which might be noticed, but isn't going to hurt someone with a $400K vehicle. (usually a few percent of the premium).

In truth, if you are carrying $100K in property damage and if this is reasonable for your income, its unlikely anything further would come of it. Sort of the 'blood from a turnip thing', with a dose of you were reasonable, probably more reasonable than someone driving a $400K car!

People overrun their property damage limits all the time. Either limits are way to low or they end up in multiple car accidents, hit buildings, make a drive thru out of home depot and destroy inventory (that was a fun claim (not)).

Personally, I like to sell at least a $500K combined single limit policy, not all carriers offer it and not everyone wants to pay for it, though it usually isn't much more than the 100/300/100 policy they have, which isn't much more than the 25/50/25 policy a lot of people have.

Dan

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oneagent - Personal umbrellas do extend property damage liability, at least the ones I've been involved with.

As a random proof point, lets let Geico explain:
GEICO | About Umbrella Insurance ~ Learn about an umbrella policy

This is always an area of confusion though, since they are broken out differently on the auto policy than the umbrella and the attachment point from the auto policy to the umbrella is different. Instead of $250/500 liability, you usually attach to $100K property damage.

Dan

 

[badkitty]

Personally, I like to sell at least a $500K combined single limit policy, not all carriers offer it and not everyone wants to pay for it, though it usually isn't much more than the 100/300/100 policy they have, which isn't much more than the 25/50/25 policy a lot of people have.

Dan

Hi Dan!

Can you explain to me what the $500k combined single limit policy means? Using the scenario I described in the OP, will the $500k cover property damage to the entire $400,000 Lamborghini? Which companies offer such policies?

I always drive as carefully as I can, but accidents do happen. (that's why they're called accidents, right?) I figured it's wiser to carry as much insurance as I can reasonable afford. These days, there are lots of $100k+ vehicles on the road. This morning, I counted 27 $100k+ cars and SUVS during my 45-minute commute. (including one spanking new Rolls, but I think those are $250k?) Yes, it's a killer 11-mile commute, but the interstate is ALWAYS congested.

 

[Guest]

Hi Dan!

Can you explain to me what the $500k combined single limit policy means? Using the scenario I described in the OP, will the $500k cover property damage to the entire $400,000 Lamborghini? Which companies offer such policies?

I always drive as carefully as I can, but accidents do happen. (that's why they're called accidents, right?) I figured it's wiser to carry as much insurance as I can reasonable afford. These days, there are lots of $100k+ vehicles on the road. This morning, I counted 27 $100k+ cars and SUVS during my 45-minute commute. (including one spanking new Rolls, but I think those are $250k?) Yes, it's a killer 11-mile commute, but the interstate is ALWAYS congested.

CSL (Combined Single Limit) means that there is no divided limit on claims. On a policy that has limits of 100/300/100 there will be a limit of $100K for any one person's bodily injury, $300K per accident, and $100K for property damage.

If you have a CSL of $500K then it just means that regardless of the amount of bodily injury and/or property damage any accident will be covered up to the full policy limit. They aren't uncommon and many companies (every single one I work with) offers it.

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I remember watching a news report about someone crashing into
a $400,000 Lamborghini near New York City. The Lambo was
a total loss. Since most auto insurance policies have a $100k
property damage limit, how will the at-fault drive afford to pay
back the rest of the $300,000?(give or take a few bucks)

There is nothing unique or hard to find about higher limits than $100K. Almost every company that I work with offers coverage up to $1M for property damage.

On my personal policy the difference between $100K and $1M in property damage is about $80/year.