In our profession as personal injury trial lawyers, we see cases every day in which a negligent driver has caused injury and does not have enough liability insurance. Many times these drivers are responsible members of their community, with good jobs, homes, and families. Precisely the type of people who cannot afford to have a sudden large financial liability which will force them to drain assets above and beyond their insurance. It could be you.
It all starts when the driver, let’s call him John, buys or renews his auto insurance. John makes $75,000 per year as a mid-level manager for a large corporation. He’s married with two kids and owns his own house. He knows he needs more than the state minimum of $15,000 per person and $30,000 per accident. His insurance broker or sales representative tells him he will be just fine with $100,000. John thinks, “Sure, that sounds right. I’ve never injured anybody. And if I did, how badly would they be hurt?”
A year later, John is driving on the freeway in the rain and hydroplanes into Pam’s car, slamming her into a ditch off the road where her car rolls over. Pam requires emergency spinal surgery, and her medical bills alone are over $100,000. Add in her claim for wage loss and pain and suffering, and John is seriously underinsured. His own assets are at risk.
How does this play out for John? If he is lucky, Pam simply settles with his insurance carrier for the policy limit. (Pam may have uninsured motorist coverage– see below.)
If he is unlucky, Pam and her lawyer say, “Disclose your assets and we’ll consider settling with you for a fair amount of your own money.”
If Pam takes John to court and wins a large verdict, say $500,000, John’s assets, and his wife’s, are at risk. His wages can be garnished. Pam can put a lien on any property he owns, and his bank accounts. John may have to consider bankruptcy. Not a pretty picture.
How can people protect themselves against this horrible situation? First, buy at least $500,000 in liability insurance, or better yet $1,000,000. It does not cost much more to go from $100,000 to $500,000, only about $100 per year with most carriers. If you are a homeowner, purchase an umbrella policy of at least $1,000,000 at a cost of about $200. Umbrella policies sit on top of auto and homeowners liability policies and add extra protection against larger losses.
Another way to protect yourself is to purchase a lot of uninsured motorist (UIM) coverage. It’s a very inexpensive way to protect yourself and your family if a negligent driver hurts you. Example: you buy $500,000 in UIM and are hit by a driver who causes you to have surgery. But that driver is either uninsured or only has a state minimum $15,000 policy. Despite the irresponsible actions of the other driver, you will have access to up to $500,000 in insurance to cover your medical expenses, wage loss, and pain and suffering. And you don’t even have to go to court- your carrier either pays you or you go to a simple binding arbitration that will take a day or less. If you have a large claim, you would want to be sure to be represented by a well-qualified personal injury lawyer.
The upshot: carrying larger amounts of insurance coverage is relatively inexpensive and can save your financial life when the nightmare happens and you injure someone.