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Old 05-15-2019, 09:26 AM   #1
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Home+Auto insurance coverage

My wife and I were debating...

what is likelihood a car accident triggers enough liability/cost that owning the house is at risk?

I typically carry about $300k liability on auto, then put a $1M umbrella over house.

Has anyone heard of someone "losing their house" or "losing a lot of money" because the auto insurance was not the proper coverage amount?
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Old 05-15-2019, 09:33 AM   #2
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Quote:
Originally Posted by jIMOh View Post
My wife and I were debating...

what is likelihood a car accident triggers enough liability/cost that owning the house is at risk?

I typically carry about $300k liability on auto, then put a $1M umbrella over house.

Has anyone heard of someone "losing their house" or "losing a lot of money" because the auto insurance was not the proper coverage amount?
I haven't heard but my insurance agent advised if you are at fault that injured or cause the death of a car full of doctors or athletes and they or their families sue, get ready for the worst.
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Old 05-15-2019, 09:55 AM   #3
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~20 years ago, Charles Givens ("Wealth Without Risk") had his staff research damage awards for south Florida, a highly litigious area then & now.

He pointed out in his book that $1+ million awards were only when the defendant was DWI.

So don't drink (or drug) & drive.

I still carry a $2 million umbrella, even though state law here heavily restricts the ability of private creditors to collect on judgments (e.g. can't garnish wages, all tax-deferred accounts of any amount are exempt)
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Old 05-15-2019, 12:50 PM   #4
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In Texas, many assets are protected against lawsuits... your homestead (main house, with no value limit), one car, $60K of personal assets, all retirement accounts, Roth accounts, annuities, pensions, SS, 529 accounts, life insurance proceeds, current wages, even two horses and two firearms.

In our case, what's exposed in a lawsuit is mainly our taxable accounts and a small rental house. We have $500K liability on the auto policy and same on the home policy, plus $1M umbrella. So our exposed assets would only come into play for settlements in excess of $1.5M. I'm reasonably comfortable with that. Even in catastrophic personal injury cases, I've read that a very high percentage of lawsuits settle for policy limits as long as the defendant was not obviously under-insured.
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Old 05-15-2019, 12:58 PM   #5
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As far as asset protection laws go, the three states that are the most "friendly" to asset protection from litigation are Texas, Florida and Oklahoma.

When we moved from Texas to Oregon, we upped our umbrella from $1M to $2M. As it turns out, $2M of coverage in Oregon (about $190) was cheaper than $1M in Texas. In fact, dropping from $2M to $1M in Oregon would only save about $40 a year.
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Old 05-15-2019, 02:48 PM   #6
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Most people would file bankruptcy if an accident judgement went far enough over the liability insurance coverage. So it would seldom be an issue.

My big issue is a young daughter that's not protected my assets. She's had a couple of $3K wrecks, and she let her boyfriend drive my Honda Civic and totaled it out. Then my wife backed into a pole at Walmart. Allstate didn't forgive me--and they flat out cancelled my insurance. I had to change companies at double the previous premiums. Moral of the story--let the kids get insurance in their own names as soon as possible.
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Old 05-15-2019, 05:18 PM   #7
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Originally Posted by Bamaman View Post
Most people would file bankruptcy if an accident judgement went far enough over the liability insurance coverage. So it would seldom be an issue.

My big issue is a young daughter that's not protected my assets. She's had a couple of $3K wrecks, and she let her boyfriend drive my Honda Civic and totaled it out. Then my wife backed into a pole at Walmart. Allstate didn't forgive me--and they flat out cancelled my insurance. I had to change companies at double the previous premiums. Moral of the story--let the kids get insurance in their own names as soon as possible.
This is the kind of issue I would like a deeper dive on...

if married, would the spouse being on a different policy change the risk (I live in MI).
if kids are on their Mom's policy (I am divorced, kids are in OH), is my house in scope if they get an accident?
If I own the kids car, and the car is on their mom's policy, did anything change?
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Old 05-15-2019, 05:46 PM   #8
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This is the kind of issue I would like a deeper dive on...

if married, would the spouse being on a different policy change the risk (I live in MI).
if kids are on their Mom's policy (I am divorced, kids are in OH), is my house in scope if they get an accident?
If I own the kids car, and the car is on their mom's policy, did anything change?
A lot depends on if your state has owner liability laws, like mine does. Both the owner of the car and the driver can be held liable in case of an accident. On our most recent car purchase, my husband and I had it titled in both of our names to remove the issue of owner liability. That way, no matter which of us drives it, the other one can't also be held liable in case of an accident.
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Old 05-15-2019, 10:44 PM   #9
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Originally Posted by gwraigty View Post
A lot depends on if your state has owner liability laws, like mine does. Both the owner of the car and the driver can be held liable in case of an accident. On our most recent car purchase, my husband and I had it titled in both of our names to remove the issue of owner liability. That way, no matter which of us drives it, the other one can't also be held liable in case of an accident.
I'm sure you checked this, but it's weird to me
in case of an accident of course the driver could be sued, and why not sue ALL owners. Which would be both of you.

Lots of other lawsuits do that where they shotgun the sue to include everyone and let people prove they are not liable.
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Old 05-16-2019, 02:57 AM   #10
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Each state is different. We live in Florida with 'no fault' insurance laws. My wife's accident in February left her with a surgical implant to her wrist and two totaled cars. We are so lucky it was not worse with a 45 mph collision (two new Mercedes). DW is recovering use of her arm but it will take a year.

Our policy MetLife was great to work with - prompt payment for medical, more than fair value vehicle replacement with quick payment. We, and the other driver had $100k/person and $300k/accident coverage. We also had $250/k underinsured motorist coverage.

Other driver was at fault. Last week GEICO offered an unsolicited $100k settlement that required Met to sign off. Wow. First thing Met told us was our only other recourse for more $ was use of the $250k underinsured motorist rider and they would sue the other individual. We declined but by their process they checked her banking and real estate assets that were not protected (pension, IRA, home equity) before signing off.

Other driver was recently widowed and not walking post accident for several months. We took the settlement offer with no lawyers involved.

This whole experience has been an eye opener for insurance liability. Getting umbrella insurance and upping car insurance to cover unprotected assets is on the top of the to do list.

So glad it was not worse for DW.
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Old 05-16-2019, 07:29 AM   #11
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I'm sure you checked this, but it's weird to me
in case of an accident of course the driver could be sued, and why not sue ALL owners. Which would be both of you.

Lots of other lawsuits do that where they shotgun the sue to include everyone and let people prove they are not liable.
I did look into it and confirmed it with our insurance agent. The premise is that the owner gave permission for a non-owner to drive the car and is, therefore, also held responsible for the actions of that driver. When 2 people own the car, both have permission to drive the car, as both own it. Joint car owners can't be held responsible for the actions of the other owner.

A practical example would be this: The older car is still in my husband's name alone. Our son is learning to drive, so he and I are both driving that car. If my son or I was driving and caused an accident, the driver and my husband (as owner) could be sued, because he gave permission for us to drive his car.

The newer car is owned by my husband and myself. He is currently driving it. If he caused an accident, he could be sued. I could not be sued, because I can't give permission for him to drive the car. Both of us have permission as joint owners of the car.

Another reason this matters is that in Ohio, each of us owns 50% of our jointly owned assets. In the examples above, with the older car, if my son was an at-fault driver, my husband's 50% of non-exempt assets would be at risk. If I was the driver, 100% of our non-exempt assets would be at risk. With the newer car, as long as only my husband or I was the driver, only 50% of our non-exempt assets would be at risk. If we let our son drive the newer car, he could be sued and both my husband and myself could be sued as joint owners of the car, putting 100% of our non-exempt assets at risk.

We do have an umbrella policy, so that would mitigate matters a bit, too.
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Old 05-16-2019, 07:40 AM   #12
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Each state is different...Getting umbrella insurance and upping car insurance to cover unprotected assets is on the top of the to do list.

So glad it was not worse for DW.
I'm glad to hear your DW will recover.

You bring up an important point for the OP. It's vital to know what assets are protected in your state. This can vary widely.

To complicate matters further, for example, Ohio is an at-fault state. There is also a comparative negligence law that says that if you're found to be more than 50% responsible for an accident, you can't recover any money at all. Insurance companies definitely have an interest in trying to prove the other driver was more than 50% at fault in Ohio.
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Old 05-16-2019, 08:43 AM   #13
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I'm glad to hear your DW will recover.

You bring up an important point for the OP. It's vital to know what assets are protected in your state. This can vary widely.

To complicate matters further, for example, Ohio is an at-fault state. There is also a comparative negligence law that says that if you're found to be more than 50% responsible for an accident, you can't recover any money at all. Insurance companies definitely have an interest in trying to prove the other driver was more than 50% at fault in Ohio.
I live in MI with the highest insurance rates of anywhere I've lived (Cincinnati, Western NY, DC Metro).

MI is a NO FAULT state
OH is an at fault state

what is the difference between at fault and no fault?

Quote:
The key difference between at-fault and no-fault insurance policies is whether the victim has a right to sue. Additionally, a central difference is who pays for the injured party’s damages.
Quote:
https://www.google.com/search?q=what...hrome&ie=UTF-8
No-Fault insurance, also known as Personal Injury Protection (PIP), pays for the injuries sustained by the policyholder rather than injured third parties. ... The major difference in No-Fault car insurance coverage is that motorists are responsible for carrying policies that include Personal Injury Protection (PIP).
I am not sure what that really means
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Old 05-16-2019, 07:56 PM   #14
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Disabling them for the rest of their life might be even more expensive than killing them. . . . It is possible your wages could be garnished to make payments . . . it really just depends. Insurance is the only thing you will ever buy that you HOPE not to use.
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Old 05-17-2019, 02:25 AM   #15
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jIMOh - The specifics of no fault laws are different in each state. Generally, it means that damages are awarded earlier to the accident victims and outside of the courtroom. This is the incentive to insurance companies to avoid high legal fees and lengthy courtroom drama. In Florida, lawyers cannot solicit clients from accidents until after 90 days, and everyone must carry PIP insurance.

Having just gone through this recently, no-fault certainly worked in our favor. Having PIP meant that my insurance company payed medical expenses immediately following the accident instead of waiting for reimbursement from the other drivers policy. As joint owner of the car and policy, I had to sign off on the settlement.

DW and I provided cars and insurance for the kids up until college graduation. Once they had income, we had them get their own insurance and sold them the latest hand me downs vehicles for $10. Registering the cars and insuring in their own names eliminated liability for DW and myself.
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Old 05-17-2019, 07:40 AM   #16
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I'm moving from California to Nevada this month and was having this conversation with the new insurance agent. He said that in Las Vegas if his clients hit someone in their cars that about 80% of the time the other party gets a lawyer and sues for whatever they can get. I decided to increase my liability coverage just in case. I'll be in Reno where drivers are more polite but in Las Vegas they drive like aggressive idiots, the same like in California. I drive an older car and don't look like I have money but you never know. As far as the house he said that it's protected up to $550,000 by Nevada law. I'm getting increased liability coverage for it too just in case. I'd hate for someone to go after me and mess up my plans.
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Old 05-17-2019, 08:13 AM   #17
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Another reason I have umbrella insurance: what if it is really my (or a family member's) fault?

I have a friend whose younger sibling "borrowed" their vehicle (broke into their place and stole the keys), was scr*wing around (no alcohol or drugs,) ran a red light, and permanently crippled a single mom with young kids.

My friend didn't want to throw their sibling under the bus with a grand theft auto charge, and so sweated until the injured party agreed to accept the policy limit. Given he was in grad school I bet his auto policy limit was pretty low.

But in our case (were it me or spouse or kid causing the injury) I've a $2 million umbrella (plus $500,000 auto) quickly available for the injured party, as long as they agree to settle for the policy limits.
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Old 05-17-2019, 10:24 AM   #18
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I appreciate all the replies and hope others share- I have learned a lot and thank each of you for sharing a story or something to think about.

Thanks again.
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