how much liability coverage?

[pb4uski]

Easy answer to this question that comes up a lot.


Questioin #1. If someone hurts you and you can't work anymore....how much would you sue them for?

That is how much liability insurance you should have.

Isn't it more that is how much liability insurance that they should have? (which you can't control).

Liability insurance is for damage that you cause to others so the question is backwards.

 

[pb4uski]

How much liability should I carry?

Ask yourself this.....If a negligent driver crippled me and killed my family in my car... how much would I sue them for?

This is how much liability insurance you should have.

You can sue them for as much as you want to but you can't get blood out of a stone.

That and you have it backwards unless you are the negligent driver and killed someone else's family... which is where your liability insurance would provide coverage.

I think of it differently. If I were to have an accident and am at fault and get sued for $100 million, my insurer and umbrella insurer have millions of good reasons to provide me with a vigorus defense.

 

[copyright1997reloaded]

Personal Umbrella Insurance for Families & Individuals

Protect your savings and secure your future with an extra layer of affordable personal umbrella liability insurance coverage from RLI.

www.rlicorp.com

Yeah, I wish there was one-stop shopping for our two homes in different states and two cars registered in different states, boats and an umbrella but since insurance is regulated by state it isn't possible.

I've ended at the best spot that I can with the all the basic coverages with the same company but two different agents, one in each state.

Actually, now that I think of it, having a separate company for the umbrella will give me the flexibility to have the Texas house and truck and the Vermont house, car and boats with separate carriers if premiums are lower and it would be harded to do when the umbrella is with my Texas property insurer.

Thank you for the link.
My insurer (a manager there) called me yesterday to "discuss my concerns". We shall see. I told them I would not e-sign the new (worse, more expensive) policy when my old policy was cancelled "mid-stream" by then. Also said I would do the new one when the old one expires (unless of course they decide to non-renew).

 

[copyright1997reloaded]

Personal Umbrella Insurance for Families & Individuals

Protect your savings and secure your future with an extra layer of affordable personal umbrella liability insurance coverage from RLI.

www.rlicorp.com

Yeah, I wish there was one-stop shopping for our two homes in different states and two cars registered in different states, boats and an umbrella but since insurance is regulated by state it isn't possible.

I've ended at the best spot that I can with the all the basic coverages with the same company but two different agents, one in each state.

Actually, now that I think of it, having a separate company for the umbrella will give me the flexibility to have the Texas house and truck and the Vermont house, car and boats with separate carriers if premiums are lower and it would be harded to do when the umbrella is with my Texas property insurer.

Wow, just did a quote and it is quite a bit less than my current. I even included 45 acres of vacant land which I am not positive is/is not included on the current one. Heck, I could get $5 million of coverage for about 75% of my current insurer's $3 million policy. Thanks again!

 

[scrabbler1]

I personally think it's pretty negligent of IL to have the low limits it has on car insurance.
Illinois' minimum car insurance requirements, drivers must have liability coverage with limits of $25,000 for bodily injury per person, $50,000 per accident and $20,000 for property damage per accident.

There are probably a lot of folks driving around with $25K coverage, so if they hit someone, that person has little chance of getting reimbursed for all the medical costs.

There is a coverage which protects you in case the other party has liability coverage, just not too much of it. It's called Underinsured Motorists Bodily Injury (UIMBI) and (available in some states) Property Damage (UIMPD). In a few states UIMBI is mandatory, but in many states it is optional, especially UIMPD (because your own Collision coverage can cover you).

UIM is a strange coverage and varies by state how it applies. A broader type of UIM will cost you more than a more limited type.

When I worked in the actuarial field during my working career, I did a lot of pricing changes in response to new and changing insurance laws. One little oddity was that when a state strengthened its mandatory insurance law, one's UM rates would decline but one's UIM rates would increase, albeit slightly, because those newly insured folks would presumably buy minimum limits.

 

[Stormy Kromer]

You can sue them for as much as you want to but you can't get blood out of a stone.

That and you have it backwards unless you are the negligent driver and killed someone else's family... which is where your liability insurance would provide coverage.

I think of it differently. If I were to have an accident and am at fault and get sued for $100 million, my insurer and umbrella insurer have millions of good reasons to provide me with a vigorus defense.

I was an insurance agent for 30 years. I had a client cause an accident for over their liability limits. They sued my clients A$$ and won. My client lost assets out of their pocket, plus a couple million, and my client threatened to sue me for the difference because I didn't sell them enough liability insurance. My client lost both cases and lost a couple million dollars. Cost me a pile in defense fees.

pb4uski. I don't have it backwards. You really do. I insured many negligent drivers involved in liability suits. Their liability insurance did provide coverage. And defense, right up until policy limits were reached. It wasn't always enough and they had to pay out of pocket for the excess verdict.

You can't get blood out of a stone, but courts can garnish wages. It really happens. And you can pay forever. Have you ever been sued? if you are the first thing you do is call your insurer and ask "Do i have enough insurance to cover this?!?

If you are sued for $100 million and loose. Your coverage ends at policy limits. So does defense. If you have $1,000,000 limits your on the hook for the next $99,000,000. Don't believe the story that 'They'll only sue you for what you have to lose!". I know people who lost everything believing that.

Plus, don't you feel a responsibility to have enough insurance to take care of the people you injured? If someone hurt you I bet you would. If they didn't have enough liability insurance and were sitting on millions would you settle for the amount of insurance they had ? you'd have a poor attorney if they didn't.

Liability is just your first line of defense. You and your assets are the next.

And trust me pb4youski. Your insurance company can have $100 million in assets, they will only cover you until your $1 million of liability runs out.

 

[ncbill]

Well, Chapter 7 BK would be used to discharge an excess judgment, assuming nothing bars that.

Defendant DUI is what normally bars discharge for vehicle accidents.

IIRC, wage garnishment ends on filing BK, assuming one's state (not mine) permits it.

 

[Gumby]

There is a fairly long list of obligations that cannot be discharged in bankruptcy located here - 11 U.S. Code § 523 - Exceptions to discharge

 

[Dash man]

We haven’t touched our retirement accounts because of the ERISA protection they have protecting them from judgements and creditors. We keep plenty of liability and umbrella insurance, but if the worst case scenario occurs, we’ll still be okay.

 

[Stormy Kromer]

I don't know about these exemptions, but I would not bank on them. My next door neighbor's son had an at fault accident and he lost his business and had to refinance his house for his Excess Judgement. He had auto BI limits of 100/300. The courts had no problem blowing right through those limits and went for his assets, he lost.

My earlier example of how much would you sue someone that hurt you should be explained further. It was to point out that if someone hurt you and did $million in damages...shouldn't you have at least that much liability insurance too?

 

[Gumby]

I don't know about these exemptions, but I would not bank on them. My next door neighbor's son had an at fault accident and he lost his business and had to refinance his house for his Excess Judgement. He had auto BI limits of 100/300. The courts had no problem blowing right through those limits and went for his assets, he lost.

My earlier example of how much would you sue someone that hurt you should be explained further. It was to point out that if someone hurt you and did $million in damages...shouldn't you have at least that much liability insurance too?

Just to be clear, those are not exemptions you should rely on. Those are things from which bankruptcy will not save you.

Your point from earlier was clear, in my opinion. If you were injured and sued somebody, how much would you ask for? Now put yourself in the shoes of somebody injured by your negligence. How much would they sue for?

 

[Chuckanut]

The guy who totaled my previous car only had minimum property coverage of $10,000. That cost him another $5,000 out of pocket. He was insured for the state required minimum amounts. Fortunately, nobody was in my car so he faced no injury claims. That could have been very expensive for him.

 

[pb4uski]

I was an insurance agent for 30 years. I had a client cause an accident for over their liability limits. They sued my clients A$$ and won. My client lost assets out of their pocket, plus a couple million, and my client threatened to sue me for the difference because I didn't sell them enough liability insurance. My client lost both cases and lost a couple million dollars. Cost me a pile in defense fees.

pb4uski. I don't have it backwards. You really do. I insured many negligent drivers involved in liability suits. Their liability insurance did provide coverage. And defense, right up until policy limits were reached. It wasn't always enough and they had to pay out of pocket for the excess verdict.

You can't get blood out of a stone, but courts can garnish wages. It really happens. And you can pay forever. Have you ever been sued? if you are the first thing you do is call your insurer and ask "Do i have enough insurance to cover this?!?

If you are sued for $100 million and loose. Your coverage ends at policy limits. So does defense. If you have $1,000,000 limits your on the hook for the next $99,000,000. Don't believe the story that 'They'll only sue you for what you have to lose!". I know people who lost everything believing that.

Plus, don't you feel a responsibility to have enough insurance to take care of the people you injured? If someone hurt you I bet you would. If they didn't have enough liability insurance and were sitting on millions would you settle for the amount of insurance they had ? you'd have a poor attorney if they didn't.

Liability is just your first line of defense. You and your assets are the next.

And trust me pb4youski. Your insurance company can have $100 million in assets, they will only cover you until your $1 million of liability runs out.

I worked in insurance for 25 years. Where did I ever say or even suggest that the insurer would ever pay more than the coverage limits? I didn't, so either put up the quotes where I said that or shut up.

At the extreme, you can't ever have too much liability insurance, but nobody does as a practical matter and agents don't recommend it. How many people have even a few million of liability coverage? Very few, yet multi-million liability judgements are not rare.

Let's say I get into a horrible car accident and am judged to be at fault. The other driver is disabled and now unable to to work and I am liable for his financial damages. If the other driver is a 65-year old of modest income then between liability and umbrella there is likely enough coverage to cover the damages. If on the other hand the other driver is a 30-year old professional who makes a half-million a year then I'm screwed.

The insurers would pay up to the coverage limits and I'd declare bankruptcy and lose most of my assets but would get to keep my protected retirement accounts and perhaps my home but that's about it. However, no one that I know of carries enough liability insurance to cover that scenario.

 

[ncbill]

There is a fairly long list of obligations that cannot be discharged in bankruptcy located here - 11 U.S. Code § 523 - Exceptions to discharge

Which don't apply to vehicle accidents, except for DUI.

I should also point out that a legal judgment is not a voluntarily-incurred debt.

Which is why Chapter 7 is available for full discharge.

And the "next door neighbor's son" would likely have not lost their exposed assets with even a modest umbrella.

As mentioned, retirement accounts like a 401k are not exposed to creditor claims.

 

[Gumby]

Which don't apply to vehicle accidents, except for DUI.

.....

Depends on the circumstances. Simple negligence other than DUI? Doesn't apply. As a result of "road rage"? I'd argue that 523(a)(6) applies.

 

[ncbill]

Depends on the circumstances. Simple negligence other than DUI? Doesn't apply. As a result of "road rage"? I'd argue that 523(a)(6) applies.

Sure, that would apply after a criminal conviction.

 

[Stormy Kromer]

I worked in insurance for 25 years. Where did I ever say or even suggest that the insurer would ever pay more than the coverage limits? I didn't, so either put up the quotes where I said that or shut up.

At the extreme, you can't ever have too much liability insurance, but nobody does as a practical matter and agents don't recommend it. How many people have even a few million of liability coverage? Very few, yet multi-million liability judgements are not rare.

Let's say I get into a horrible car accident and am judged to be at fault. The other driver is disabled and now unable to to work and I am liable for his financial damages. If the other driver is a 65-year old of modest income then between liability and umbrella there is likely enough coverage to cover the damages. If on the other hand the other driver is a 30-year old professional who makes a half-million a year then I'm screwed.

The insurers would pay up to the coverage limits and I'd declare bankruptcy and lose most of my assets but would get to keep my protected retirement accounts and perhaps my home but that's about it. However, no one that I know of carries enough liability insurance to cover that scenario.

I will shut up. But I'll ask you this.. based on your 25 years in the insurance business...were you ever the agent for a client who caused a policy limits case and then you had to comfort your client that they wouldn't lose everything? and then hope and tell them to pray that there wouldn't be an excess judgement. Bankruptcy is a very weak and irresponsible defense. A very poor backup plan that I've never heard before. A lot of my clients were farmers and their retirement plan was their farm, farms aren't protected like you mention that retirement plans are. $5 million was the standard that we used for liability limits for farmers. Many chose $10,000,000 limits.

One client hit a train with his tractor and they sued him for policy limits and the value of his farm. The insurer reserved $8,000,000 and settled for about half. My client had a stroke before it was settled, died soon after. He had enough limits to settle the claim.

I would be embarrassed and irresponsible to tell a client "I'd declare bankruptcy" if they were faced with a large liability claim. Socially irresponsible.

Some quotes to your comments.

"How many people have even a few million of liability coverage?" Most of my clients. "yet multi-million dollar judgements are not rare" Your admitting its true. All the more reasons my clients had multi million limits.

"At the extreme you can't ever have too much liability insurance but as a practical matter and agents don't recommend it" Give me an example of an agent who didn't recommend it. I offered umbrella liability policies up to $10 million to every client I had.


"where did I ever say or even suggest that the insurer would ever pay more than the coverage limits" Check what I said. I never said that the insurer would pay more than the coverage limit, I should have been more clear, they won't pay more than the policy limits and once their limits are reached I said YOU will be the one paying, the insurer will close the books and then you are on your own. You're defense coverage last until limits are gone.


Quote me on that. At your request I'll shut up now.

 

[pb4uski]

^^^ Perceptive glimpse of the obvious

 

[Kings over Queens]

"where did I ever say or even suggest that the insurer would ever pay more than the coverage limits" Check what I said. I never said that the insurer would pay more than the coverage limit, I should have been more clear, they won't pay more than the policy limits and once their limits are reached I said YOU will be the one paying, the insurer will close the books and then you are on your own. You're defense coverage last until limits are gone.

They continue to defend UNTIL policy limits are paid, but keeping in mind that defense cost don't erode policy limits. Policy limits (damages) are paid as though a settlement, or jury verdict.

My experience (39 1/2 years) is if or when a carrier is offering policy limits, usually, not always, but usually, they condition the policy limit tender as a condition of full and final settlement.

There are no absolutes and if offering $10,000,000 in excess/umbrella limits was your best practice, I can tell you that is the outlier. Not many do.

 

[pb4uski]

... There are no absolutes and if offering $10,000,000 in excess/umbrella limits was your best practice, I can tell you that is the outlier. Not many do.

^^^ That seems consistent with the results of a poll on the topic.

See: Poll: What is your total liability coverage?

Poll results at this writing... 60 responses with 68% of responses less than $3 million base coverage and umbrella combined.