January 10, 2014

Tesla, TDI and High Performance Vehicles: Liability, Assets & Analysis

In Insurance

Innovative engineering and breakthroughs in design continue to break ground in the automotive industry. These new vehicles are in high demand; in the last 12 months we have seen a surge of high end new car acquisitions.

The Tesla is experiencing great success – even while under active investigation by the U.S. National Highway Traffic Safety Administration.  Audi has reported record sales of its Q5 – and continues to advance technology with ground breaking advances in the TDI clean diesel market.  Sadly, Paul Walker’s tragic fatality accident in a Porsche Carrera GT highlights the challenges and perils of high performance vehicles.

In the insurance world, high performance vehicles create challenges not readily met by standard auto insurance policies.  With rapid acceleration (legendary torque allowing 0 to 60mph launch speeds); expensive composite material construction (carbon fiber and more) and high performance wheel sets running many thousands of dollars, standard auto policies are usually inadequate, whether you own a high end vehicle yourself or are at fault in an accident involving one.

The first coverage consideration is the liability exposure – how much are your auto liability limits?  Most traditional liability insurance provides split limit policies and typically read 100/300/100 or 250/500/100, and sadly, offer limited coverage.

Take, for example, the classic 100/300/100 coverage; the first 100 translates to $100,000 maximum  coverage for personal injury per person.  The 300 translates into a $300,000 maximum coverage for personal injury for the accident, with the caveat that coverage is ‘capped’ at a maximum of $100,000 per person and only scales up to $300,000 if more than 3 people suffer injury.  The last number in the sequence refers to the limit available for damage to property (did you hit a S550 at $125k; a Range Rover at $150k; or careen off the road and drive into the side of a home) – perhaps leaving you responsible for hundreds of thousands of dollars.

Much improved over a split limit policy is a ‘single limit’ policy, which provides a designated amount for all damages with no internal restrictions or caps.  This provides the full policy limit available regardless of the number of individuals injured in an accident.

Next to review is coverage for your car itself – is your policy based on ‘actual cash value’ (i.e. market value of a used car), or is it in fact an ‘agreed value’ – you actually insure your vehicle for a designated dollar amount?  Imagine your car is totaled – with agreed value contract your dollar amount is agreed to in advance, adjusted annually and under some auto contracts the deductible is waived in the event of a total loss.

Does your policy provide coverage for OEM (original equipment manufacturer) parts, or does it require generics?  If your Audi is damaged, your Mercedes crunched, your Telsa scraped, wouldn’t you want original parts to restore your vehicle?

Hmmmm – how about windshields? Some cars, for example the Audi R8, have a smart windshield/Head-Up Display (HUD) – embedded in the windshield.  Luxury cars may have fitted glass – does your policy allow for original glass or does it mandate a SAFELITE generic repair?

There truly is a difference in insurance for highly successful individuals compared to the run-of-the-mill insurance advertised so heavily on TV.  At Pacific Northwest Insurance, we recognize that policies need to be tailored to specific risks and are available for coverage review, analysis and recommendations.  Wishing all safe driving and a spectacular new year!

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