Elon Musk totaled a $1 million McLaren with Peter Thiel riding shotgun — and hadn't bought insurance

With his $22 million cut from the deal, Musk set his sights on a 627 horsepower, 240-mph McLaren F1, which he snapped up for $1 million. Soon, Musk was tooling around California’s Bay Area, and often cruising between San Francisco and Los Angeles in the vehicle.

One day, in 2000, the PayPal cofounders took the McLaren to Palo Alto, where the duo planned to brief venture capital company Sequoia Capital on a finance deal.

En route, Thiel asked Musk how fast the McLaren could go; Musk turned to him and reportedly said, “Watch this.”

Moments later, Musk lost control of the vehicle, which went airborne and then careened into an embankment, essentially destroying the vehicle. Both passengers were uninjured.

Thiel recalled the crash in a 2017 New York Times interview.

“It was a miracle neither of us were hurt,” he said. “I wasn’t wearing a seatbelt, which is not advisable. Elon’s first comment was, ‘Wow, Peter, that was really intense.’ And then it was: ‘You know, I had read all these stories about people who made money and bought sports cars and crashed them. But I knew it would never happen to me, so I didn’t get any insurance.’ And then we hitchhiked the rest of the way to the meeting.”

No coverage leads to big headaches, auto insurance experts say

Not having vehicle insurance is asking for trouble, for trillionaires and for Toyota drivers, especially those with lead-foot driving habits.

“The car is the smallest risk,” W. Travis Patterson, managing partner at Patterson Law Group in Fort Worth, Texas, told Moneywise. “If you total your own uninsured car, you lose the car. If you hit someone else, you owe whatever a jury says their injuries are worth, and no amount of wealth caps that number.”

Patterson said driving without liability coverage is also illegal in every state but New Hampshire, “which means a suspended license, fines, and a very unsympathetic jury when they hear you skipped insurance you could easily afford,” he said.

Wealth also makes liability coverage, especially at the astronomical levels Musk owns, more important, not less. “Most injured people never see full compensation because the at-fault driver carries a minimum-limits policy and owns nothing worth chasing,” Patterson said.

A wealthy driver is the opposite, as the injured person’s lawyer will find the assets, and the case will be worked to the full value of the injury instead of the policy limit. “Self-insuring means volunteering to be that defendant,” Patterson noted.

Here’s how bad it goes if an uninsured driving billionaire hits someone

Behind the wheel, billionaires who injure or kill an individual in a car crash pay a high price, even in their well-heeled, well-protected lives.

“Catastrophic injury claims routinely settle in the millions,” Edward Hsyeh, owner and CEO at New York City-based Anvo Insurance, told Moneywise. “Lifetime care for a paralysis or brain injury can run $10 million or more. Without insurance, that’s a judgment against the driver.”