"So what happens if you have a net worth of 1 million dollars and have a 1 million dollar umbrella policy but have a 2 million judgement against you? Are you then broke? (or worse)" -- Car Guy
Back in the day, I was a civil trial lawyer. Some things to note: First, many or most cases settle before a judgment is ever reached. This means that if the injury is worth, say, $2MM, then the plaintiff (and his lawyer) are likely to take less to eliminate the high cost of trial, and the real risk of losing, or getting less from the jury than plaintiff hoped to get.
Second, the insurance company will often want to settle to keep legal costs under control, particularly if the amount sought in settlement is less than the policy limits.
Third, the courts (the judge) will often be pushing -- hard -- for settlement. Court dockets are usually overcrowded, and judges want cases to settle to clear the backlog.
Fourth, even if there's ultimately a judgment against you (assuming settlement negotiations fail AND you lose at trial), then you can still negotiate a settlement even with a judgment. When those negotiations occur, quite often the plantiff's lawyer and his client will take less than the full judgment amount to avoid chasing assets that are time-consuming and expensive to reach (e.g., jointly held assets like a house, a retirement plan protected by ERISA or state law, etc.).
So, even in the worst case scenario, the amount of net worth is seldom fully exposed, and the plaintiff and his lawyer are likely to aim for, or ultimately get, less.
So with $1MM in net worth and $1MM in coverage, all hope is not lost.
Personally, I have $2MM in coverage, and my net worth is higher than the $2MM.
YMMV, I am not your lawyer, disclaimer, disclaimer, yadda yadda.
Back in the day, I was a civil trial lawyer. Some things to note: First, many or most cases settle before a judgment is ever reached. This means that if the injury is worth, say, $2MM, then the plaintiff (and his lawyer) are likely to take less to eliminate the high cost of trial, and the real risk of losing, or getting less from the jury than plaintiff hoped to get.
Second, the insurance company will often want to settle to keep legal costs under control, particularly if the amount sought in settlement is less than the policy limits.
Third, the courts (the judge) will often be pushing -- hard -- for settlement. Court dockets are usually overcrowded, and judges want cases to settle to clear the backlog.
Fourth, even if there's ultimately a judgment against you (assuming settlement negotiations fail AND you lose at trial), then you can still negotiate a settlement even with a judgment. When those negotiations occur, quite often the plantiff's lawyer and his client will take less than the full judgment amount to avoid chasing assets that are time-consuming and expensive to reach (e.g., jointly held assets like a house, a retirement plan protected by ERISA or state law, etc.).
So, even in the worst case scenario, the amount of net worth is seldom fully exposed, and the plaintiff and his lawyer are likely to aim for, or ultimately get, less.
So with $1MM in net worth and $1MM in coverage, all hope is not lost.
Personally, I have $2MM in coverage, and my net worth is higher than the $2MM.
YMMV, I am not your lawyer, disclaimer, disclaimer, yadda yadda.
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