Author Topic: Anyone ever been sued for liability that exceeded your insurance coverage?  (Read 11597 times)

AlwaysLearningToSave

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #50 on: February 26, 2016, 08:01:37 PM »
The other thing to consider is that your insurance may be the only way someone deserving actually gets a chance to have their medical bills paid. If I was driving a car and injured someone, I would want them to be taken care of. Same thing if my deck collapsed. That contributed to me upping my limits. People can blow through $100k in medical bills in no time.

+1.

Good to remember the element of social responsibility.  It's not just about protecting your assets, it's also about fairly compensating people you might harm.

obstinate

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #51 on: February 26, 2016, 09:16:36 PM »
I know someone this happened to. Turned out in front of a motorcyclist, who was injured. The injury wasn't even that severe . . .. I don't want to give away too many details, lest the person be identified. Let's just say that the injury was much less severe than breaking a leg.

Anyway, my friend got sued. They had the maximum liability coverage on their auto insurance, but the lawsuit ended up being for twice or three times that amount. And they were forced to settle. Their lawyer told them there was every likelihood that they would lose if it went to trial. So they had to pay more than 200k out of pocket. Almost lost their house.

Since I was told about this, I keep umbrella coverage + max liability coverage on both home and auto (300/300/3M).

(Causing injuries in an auto accident is the main vector by which you could incur large liabilities as an ordinary private citizen. All the more reason to drive less, and drive a smaller car.)
« Last Edit: February 26, 2016, 09:22:49 PM by obstinate »

Lazyretirementgirl

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #52 on: February 26, 2016, 09:45:23 PM »
Retired lawyer here. Happens all the time. Umbrella policies are cheap. If you have significant assets, buy one.

CDP45

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #53 on: February 26, 2016, 11:17:42 PM »

Retired lawyer here. Happens all the time. Umbrella policies are cheap. If you have significant assets, buy one.

Or if you think you will have assets in the FUTURE (or want assets in the future...)

Personal and Umbrella insurance is Risk Transfer where it's taken on by a group of people who negotiate claims on your behalf. This is their careers, they are all quite educated, and have access to the best legal talent and experience on the planet, and every motivation to prevail because it's now their money at stake (because you transferred your risk to them).

If you operate a vehicle off your premises, I have one word that should totally justify the meager expense of an umbrella policy: Motorcycles.

I have seen the victims, I have seen all the pictures, the medical charts of the ones that survived, I've written up the large loss reviews, I've read the legal strategy, I've reviewed the negotiations, and I've seen the payouts. Done this many times, and there's no way I'll ever get on bike. And people wonder why UIM premiums are skyrocketing...

(to the commercial underwriter on this thread, less reading the forms and start reading case law such as CGL reporter to see what actually *is* covered, especially if you're in a niche industry.)

FarmStash

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #54 on: February 27, 2016, 06:02:29 AM »
Get it, its pretty cheap for the piece of mind.

Knew a trucker who backed into someone and was sued for over his coverage amounts (think were pretty high at a million dollars) since they found out he had other assets.  He was backing to a loading dock with his flashers on and after honking horn with someone directing him and a guy jumped off of the loading dock behind the trailer that he couldnt see and hit the person who then sues even though I would think you would have to make a conscious choice to be that dumb.  It took several years and a lot of back and forth through the courts but they finally settled out of court for a couple hundred thousand.  Still was very stressful time for him knowing that he could loose everything he'd worked for.

Unfortunately with our current legal system their are some lawyers who are ambulance chasers and convince people to sue who might normally not have.

caracarn

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Re: Anyone ever been sued for liability?
« Reply #55 on: February 29, 2016, 06:55:17 AM »
caracarn, I'm really sorry that happened to you, but I'm confused as to how an umbrella policy would have helped. If this was an insured loss, it would have been completely covered by your homeowners policy as there were no damages and defense costs aren't part of a typical homeowners limit. (Meaning that the insurance carrier pays for the legal costs of defending a covered claim, but those costs don't factor into your limit.) If this was not an insured loss under your homeowner's policy, it almost certainly wouldn't have been covered by an umbrella.

It was explained that the policy could have been used to pay the legal fees.  It was in no way covered by homeowners because it was not damage to MY home.  This was someone suing me for a home I sold and later damage that occurred under their watch.

A typical homeowners policy has a property coverage section and a liability coverage section. The property coverage is for damage to the insured property, like you said. The liability coverage IS NOT limited to your home or your liability as a homeowner. It covers your liability as defined by the policy.

As an example, here's roughly what my personal insurance policy says: (minor details have been changes to not identify the insurance company; what's below is industry standard)

We will pay those sums the insured becomes legally obligated to pay as damages because of bodily injury, personal injury or property damage to which this insurance applies.

This could be your liability for a slip and fall inside or outside your home, your dog biting someone at the dog park, serving a friend alcohol and letting them drive, or any number of other things.

It's possible that your homeowners policy has an exclusion for whatever happened. If that's the case, and you buy your umbrella through the same carrier, in all likelihood they've written the same exclusion into the umbrella. The intent of an umbrella is not to pick up claims first but to provide extra limit.

And there is not any personal liability policy I've ever heard of that would pay legal fees in the absence of a covered claim.

Perhaps I am not being clear.  The suit is on a home I no longer own, therefore I do not have a policy on IT.  They had also not sued me because they got injured on my property.  They are sued because they had to fix their house up and they want to blame it on me.  That is why the umbrella policy exists because it covers liability that is not related to the current house or that is how it was explained to me.

caracarn

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #56 on: February 29, 2016, 07:04:34 AM »
Okay, let me rephrase. What are the safeguards or doctrines of tort law that prevent egregious abuse? ...

Let's take a step back and revisit the most basic principle of suing anybody for anything: If you want to recover damages against somebody, it's not enough that you have suffered damages; you also need to state a claim known to law, prove the claim, and prove that the damages are recoverable relative to the claim. Although user "bobechs" was a bit oblique in his wording, I believe this was the point that he was trying to convey too.

The law itself is different in every jurisdiction so any analysis of the various fact patterns posted in this thread will also be jurisdiction-dependent.

If somebody files a claim against you that has no basis in law, the law of the relevant jurisdiction probably provides some mechanism to resolve the case quickly and to apply for sanctions against the person who brought the case. If the person bringing a case with no basis in law is represented by a lawyer, it is probably also possible to file a complaint with the entity governing lawyers in the jurisdiction. Codes of professional practice typically prohibit lawyers from bringing claims with no basis in law. See, e.g., ABA Model Rule 3.1 ("A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous ...").

Note: I express no view on any legal issues stemming from any of the scenarios posted in this thread.

Cathy, having gone through this for three years, I will state this is absolutely NOT that case.  The challenge, as my attorneys and others I consulted is that when someone files a claim of "fraud" there is no way to prove that they did not have some reason to believe that you lied about something.  This then makes the ability to prove the frivolous nature impossible.  I will tell you that if you get sued in this manner you are just along for the ride, and no amount of legal wrangling or getting pissed or arguing the system is broken helps you (believe me I tried it all and had family and friends getting pissed at ME because I must not be doing something wrong because our system could not possibly allow this).  From personal experience I will be the first to note that.  My attorneys were so pissed at opposing counsel that they were looking at every angle they could to sanction him, but he was always on that fine line of being just into something you could not prove.  I believe the comment that my attorney made was that in twenty years of practicing law he had never run into an attorney who acted to poorly and he was a disgrace to the profession.  In the end to not waste money, even though they would have loved to sanction this guy, my attorney's advised against proceeding and I got a long class in how "easy" it is to prove and get a case dismissed.  We got it dismissed and then the appeals took two more years and nothing changed, except money just kept flying out of my pocket, so I urge anyone to not hang they comfort hat on the statement that "provides some mechanism to resolve the case quickly and to apply for sanctions against the person who brought the case".  This is absolutely NOT that case, and my $60K and three years later are all the proof anyone should need of that.

MishMash

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #57 on: February 29, 2016, 07:36:47 AM »
1. My mother, still going through it now, long and short my father was killed in the accident, she was at fault (she was driving, dads pacemaker went off in the car, she looked over at him and BAM).  She was airlifted and has so far racked up close to a half a million in medical bills, and growing.  The other people, one didn't go to the hospital, the other was discharged the same day with minor injuries.  They are going after her house since it's the only thing she has of value and she had the 300k auto policy (the lawyer says the chances of them getting it are slim since she literally is pretty much broke).  If NOTHING else, this case has shown me the EXTREME importance of good car insurance and umbrella policy coverage.  The insurance company (which will probably drop her like a hot potato when this is all said and done), has paid all the medical bills, processed payments in record time, got us the burial cash that was in the policy rider inside of a week and has literally handled EVERYTHING to this point. 

2.  To back up what someone else said about uninsured motorist coverage my neighbor is living proof to needing to have it.  She got rear ended, hard, badly injured and ended up losing her job as a result.  She was insured, and had an umbrella policy but the other driver was totally uninsured.  She spent 3 years fighting with her insurance company to pay out a decent amount of money to cover her job loss, of course, since she didn't have uninsured motorist coverage option, they didn't pay out much of anything.  The other people sued her insurance company (even though they were at fault) and ended up walking out with 6 figures, I think the total she got from her coverage was 25k and obviously nothing from the other people, she tried personally suing but they were illegally in the country and had nothing to sue for.  By the time they got the settlement from her insurance the statute of limitations in the state was up to sue.

frugaldoc

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #58 on: February 29, 2016, 07:41:37 AM »
The purpose of insurance is to protect against events that can wipe you out that you can't control. Lawsuits are one of these items. I'm not a believer in insurance as an investment, but I am a believer in insurance as insurance.

Additional auto and umbrella policies are cheap, and will protect you from a catastrophic event. This is especially important if you have assets worth protecting.

In aggregate insurance is a losing proposition, after all the insurance company has to make money. Some people win, some people lose. However, this is the wrong way to look at things since it is not an investment. It is a hedge against risk you can't control, and for this nothing works better.

I had a minor fender bender when I was in college and it was amazing how fast the 30k or so limit was reached.
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Paul der Krake

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #59 on: February 29, 2016, 07:57:04 AM »
2.  To back up what someone else said about uninsured motorist coverage my neighbor is living proof to needing to have it.  She got rear ended, hard, badly injured and ended up losing her job as a result.  She was insured, and had an umbrella policy but the other driver was totally uninsured.  She spent 3 years fighting with her insurance company to pay out a decent amount of money to cover her job loss, of course, since she didn't have uninsured motorist coverage option, they didn't pay out much of anything.  The other people sued her insurance company (even though they were at fault) and ended up walking out with 6 figures, I think the total she got from her coverage was 25k and obviously nothing from the other people, she tried personally suing but they were illegally in the country and had nothing to sue for.  By the time they got the settlement from her insurance the statute of limitations in the state was up to sue.
This story makes no sense. The at-fault driver walked away with 6 figures? The "illegally in the country" bit sounds like a made up boogeyman. Something isn't adding up.

Cathy

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #60 on: February 29, 2016, 08:06:23 AM »
Cathy, having gone through this for three years, I will state this is absolutely NOT that case. ... I urge anyone to not hang they comfort hat on [your post].  This is absolutely NOT that case, and my $60K and three years later are all the proof anyone should need of that.

I'm sorry you had a negative experience with the legal system. I am unable to comment on your specific situation, but it's well-documented that participation in contested legal proceedings can be a traumatic and harrowing experience for everybody involved, whether or not the lawsuit has merit. "Stress, anxiety and stigma may arise from any criminal trial, human rights allegation, or even a civil action, regardless of whether the trial or process occurs within a reasonable time." Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44 at 59. Thus, even without knowledge of the specific facts, I empathise with what you went through. This aspect of litigation is unfortunate and hopefully it can be improved in that regard one day.

My post was not intended to provided, and did not provide, any opinion or advice on whether you or anybody should obtain any form of insurance, nor did it contain any other specific suggestions or directions. I express no view on those matters.
« Last Edit: February 29, 2016, 08:10:38 AM by Cathy »
This post contains only general information on the issues raised by this topic. This post does not provide help tailored to your specific situation. There are many facts that could be relevant to your specific situation and I am not in possession of those facts. If you need help tailored to your specific situation, you should retain an appropriate professional and not rely on this post.

merula

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #61 on: February 29, 2016, 08:24:11 AM »
caracarn, the thing about insurance claims and coverage is that the story can change dramatically based on one tiny detail that would be of no interest to anyone who doesn't get involved with this stuff for a living. (And, Cathy would know better than me, but I think the same could be said of the law.)

The facts as you've presented them don't make sense to me. They make sense to you, and there's probably a small detail that you're not sharing or not aware of that completely changes the story. I just want to make sure that anyone else reading this thread doesn't walk away with the assumption that buying an umbrella will mean the umbrella insurance will pay legal fees for a claim not covered by either their homeowners policy or the umbrella. That's just not how umbrellas work.

Overall, if people think that buying umbrella coverage is worth it in their situation or provides peace of mind that is worth the premium, great. That makes my job a heck of a lot easier. Just be aware of two facts:

1. The profit insurance companies make on umbrella policies is more than twice the profit they make on auto policies.
2. Insurance company profit is based on taking in more in premiums than they pay out in claims and expenses. That is, they are getting more money for the insurance than the claims experience indicates that it's strictly worth.

MishMash

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #62 on: February 29, 2016, 08:57:25 AM »
2.  To back up what someone else said about uninsured motorist coverage my neighbor is living proof to needing to have it.  She got rear ended, hard, badly injured and ended up losing her job as a result.  She was insured, and had an umbrella policy but the other driver was totally uninsured.  She spent 3 years fighting with her insurance company to pay out a decent amount of money to cover her job loss, of course, since she didn't have uninsured motorist coverage option, they didn't pay out much of anything.  The other people sued her insurance company (even though they were at fault) and ended up walking out with 6 figures, I think the total she got from her coverage was 25k and obviously nothing from the other people, she tried personally suing but they were illegally in the country and had nothing to sue for.  By the time they got the settlement from her insurance the statute of limitations in the state was up to sue.
This story makes no sense. The at-fault driver walked away with 6 figures? The "illegally in the country" bit sounds like a made up boogeyman. Something isn't adding up.

Illegally in the country is her words, not mine so I can't verify if it was true or not.  But the walked away with 6 figures part....she had an explosive cursing fest on her front lawn on the phone screaming at the attorney when that one happened so I am highly inclined to believe that part of it since I was an unwilling overhearer of that conversation.   

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #63 on: February 29, 2016, 09:10:32 AM »
The part of the story I doubt is that it was the other person's fault.

Insurance companies don't routinely hand out six figures to people who are totally at fault.  Rather the opposite, they'll fight not to pay even when it's completely their insured driver's fault.

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merula

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #64 on: February 29, 2016, 09:42:44 AM »
2.  To back up what someone else said about uninsured motorist coverage my neighbor is living proof to needing to have it.  She got rear ended, hard, badly injured and ended up losing her job as a result.  She was insured, and had an umbrella policy but the other driver was totally uninsured.  She spent 3 years fighting with her insurance company to pay out a decent amount of money to cover her job loss, of course, since she didn't have uninsured motorist coverage option, they didn't pay out much of anything.  The other people sued her insurance company (even though they were at fault) and ended up walking out with 6 figures, I think the total she got from her coverage was 25k and obviously nothing from the other people, she tried personally suing but they were illegally in the country and had nothing to sue for.  By the time they got the settlement from her insurance the statute of limitations in the state was up to sue.
This story makes no sense. The at-fault driver walked away with 6 figures? The "illegally in the country" bit sounds like a made up boogeyman. Something isn't adding up.

Illegally in the country is her words, not mine so I can't verify if it was true or not.  But the walked away with 6 figures part....she had an explosive cursing fest on her front lawn on the phone screaming at the attorney when that one happened so I am highly inclined to believe that part of it since I was an unwilling overhearer of that conversation.   

Here's how it most likely worked: Driver A rear-ended Driver B. Fault was shared between the two parties. (Yes, you can be at fault if someone else rear-ends you. Maybe Driver B stopped when she shouldn't have? Impossible to know without more details.)

Driver A's insurance is responsible for their liability to others for damages, except that they're uninsured, so there's nothing to pay for Driver B's damages. Driver B's insurance is responsible for her liability to others for damages, so Insurance B pays Driver A. Uninsured/underinsured motorist coverage would have paid for Driver B's damages, but she opted not to buy it. Driver A is "judgement-proof" because of lack of assets. Immigration status has no bearing here, except that it seems unlikely that someone who isn't here legally would be able to effectively deal with Insurance B enough to get a settlement. Insurance companies ask for a lot of information and go through a long verification process before paying out any claim, let alone six figures.

former player

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #65 on: February 29, 2016, 10:47:05 AM »
I've been inspired by this thread to check my insurance policies.  Standard amounts for UK -

Personal injury to others caused by car accident: unlimited
Property damage to others caused by car accident 20m limit per incident
Personal liability for injury on my property: 2m per person per incident.

Phew.   Although I suppose the personal liability on property could be exceeded if a young person ended up tetraplegic entirely without fault on their part.


 Some of the limits in US policies reported here seem stupidly low for a reputedly litigious country with sky-high health costs.
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CDP45

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #66 on: February 29, 2016, 09:32:58 PM »
2.  To back up what someone else said about uninsured motorist coverage my neighbor is living proof to needing to have it.  She got rear ended, hard, badly injured and ended up losing her job as a result.  She was insured, and had an umbrella policy but the other driver was totally uninsured.  She spent 3 years fighting with her insurance company to pay out a decent amount of money to cover her job loss, of course, since she didn't have uninsured motorist coverage option, they didn't pay out much of anything.  The other people sued her insurance company (even though they were at fault) and ended up walking out with 6 figures, I think the total she got from her coverage was 25k and obviously nothing from the other people, she tried personally suing but they were illegally in the country and had nothing to sue for.  By the time they got the settlement from her insurance the statute of limitations in the state was up to sue.
This story makes no sense. The at-fault driver walked away with 6 figures? The "illegally in the country" bit sounds like a made up boogeyman. Something isn't adding up.

This is a major issue in California, and remember Uninsured motorist coverage is for you, not them.
http://www.thewire.com/national/2012/12/48-percent-car-crashes-los-angeles-are-hit-and-runs/59721/

arizonawildcats

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Re: Anyone ever been sued for liability that exceeded your insurance coverage?
« Reply #67 on: February 29, 2016, 10:18:03 PM »
If you are looking to save money on car and homeowners insurance, raise your deductibles on first party coverages.   I personally do not try to cut corners by lowering limits on liability insurance.   As previously mentioned, an umbrella policy is cheap and adds additional protection. 

I would not want to be in a position where claimed damages are going to be greater than the liability limits of my insurance policies.   An attorney will take the steps to run a check to see if you have assets to go after.   The participants on this board are individuals who have a net worth that is significantly higher than the average person.   So, proper insurance coverage is a key aspect of solid financial planning. 


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This is a major issue in California, and remember Uninsured motorist coverage is for you, not them.
http://www.thewire.com/national/2012/12/48-percent-car-crashes-los-angeles-are-hit-and-runs/59721/

Toward the end of the article, a police commander says that crimes against a person are a higher priority. I'm sorry, how is hitting a pedestrian and driving away NOT a crime against a person? Hitting them in the first place may have been an accident, but driving away wasn't. They're just as dead as someone killed with a gun.
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I'm sure if we got some small business owners on here, they would have tons of interesting stories for you. I know someone who owns a restaurant who has been sued many, many times for dubious reasons. One patron fell on the toilet in the restroom. As far as I know the toilet was in working order, wasn't tilted funny, no water on the floor, etc. But the patron sued. Her claim was about pain and suffering due to the fact that her sex life suffered after the toilet fall. She lost the lawsuit.

What gets me is that this is a small town. Somehow the thought of 10K or whatever in insurance money overrode the knowledge that everyone in town would be talking about her sex life and her stupid lawsuit against the nice man who runs the restaurant.

Paul der Krake

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What gets me is that this is a small town. Somehow the thought of 10K or whatever in insurance money overrode the knowledge that everyone in town would be talking about her sex life and her stupid lawsuit against the nice man who runs the restaurant.
People get talked into all sorts of things. It's not hard to see how someone in a tight spot financially could be convinced that suing is the way to go. Hey that lawyer person makes some good points, there definitely was suffering, and it's insurance money anyway, and I really need a break, and everyone does it, and it's a victimless crime...

mtn

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What gets me is that this is a small town. Somehow the thought of 10K or whatever in insurance money overrode the knowledge that everyone in town would be talking about her sex life and her stupid lawsuit against the nice man who runs the restaurant.
People get talked into all sorts of things. It's not hard to see how someone in a tight spot financially could be convinced that suing is the way to go. Hey that lawyer person makes some good points, there definitely was suffering, and it's insurance money anyway, and I really need a break, and everyone does it, and it's a victimless crime...

Ever see the Andy Griffith show where Otis sues the police station? Lawyer had him convinced he was doing a favor for Andy and Barney.

Not that it would be hard to convince Otis, but the point still stands.

AlwaysLearningToSave

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I've been inspired by this thread to check my insurance policies.  Standard amounts for UK -

Personal injury to others caused by car accident: unlimited
Property damage to others caused by car accident 20m limit per incident
Personal liability for injury on my property: 2m per person per incident.

Phew.   Although I suppose the personal liability on property could be exceeded if a young person ended up tetraplegic entirely without fault on their part.


 Some of the limits in US policies reported here seem stupidly low for a reputedly litigious country with sky-high health costs.

I agree with minimum policy limits in the U.S. being too low, but your policy limits seem extraordinarily high to this American.  What are your premiums for that kind of coverage? 

former player

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I've been inspired by this thread to check my insurance policies.  Standard amounts for UK -

Personal injury to others caused by car accident: unlimited
Property damage to others caused by car accident 20m limit per incident
Personal liability for injury on my property: 2m per person per incident.

Phew.   Although I suppose the personal liability on property could be exceeded if a young person ended up tetraplegic entirely without fault on their part.


 Some of the limits in US policies reported here seem stupidly low for a reputedly litigious country with sky-high health costs.

I agree with minimum policy limits in the U.S. being too low, but your policy limits seem extraordinarily high to this American.  What are your premiums for that kind of coverage?

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slf

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Retired lawyer here. Happens all the time. Umbrella policies are cheap. If you have significant assets, buy one.

What do you consider significant assets?  At what net worth should you start thinking about this?

mistershankly

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This topic has been dormant for awhile but I thought to resurrect it to ask a question.

I am likely facing a small claims law suit against me, and my homeowners insurance will be representing me in the case.  I'm not likely to lose but who knows what happens once/if we get into court.  I've read that judgments in court are reported to the credit bureaus and adversely affect credit scores equivalent to a foreclosure of property (i.e. 7-10 years on record with the credit bureaus).  For those of you who have lost in court as defendants, have you seen a hit on your credit score?  Since my insurance is representing me, is there anything my representing lawyer can do to not have the judgment affect my credit history?

The suit doesn't bother me so much since I have sufficient liability coverage and an insurance provider that is representing me.  Additionally, the facts are in my favor and my insurance is well researched on protecting my interests (i.e. they have investigated for months and denied the claim and are prepared to defend it).  However, in the fluke chance that there is a judgment against me, I'm curious as to what my options are to protect my financial/credit status.  Any insight would be greatly appreciated!

merula

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mistershankly, court judgments are debts the court determines you owe to another, which is why court judgments get reported to the credit bureaus. They're debts.

Insurance companies rarely litigate unless they are very very sure they'll win, or the negative consequences of losing are very very high (think asbestos workers comp claims that cumulatively total billions). I can be fairly certain your homeowners claim doesn't meet the second bar, so that tells me that it most likely meets the first one.

However, in the event that you lose the court case, your insurer will indemnify you for a loss covered by your policy. That's actually WHY they're defending you; it's to control the indemnity costs. The only way you'd be on the hook for anything personally is if the indemnity judgment was over your limit, but you said that wasn't the case.

Based on the information you've presented, you have nothing to worry about.

mistershankly

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mistershankly, court judgments are debts the court determines you owe to another, which is why court judgments get reported to the credit bureaus. They're debts.

Insurance companies rarely litigate unless they are very very sure they'll win, or the negative consequences of losing are very very high (think asbestos workers comp claims that cumulatively total billions). I can be fairly certain your homeowners claim doesn't meet the second bar, so that tells me that it most likely meets the first one.

However, in the event that you lose the court case, your insurer will indemnify you for a loss covered by your policy. That's actually WHY they're defending you; it's to control the indemnity costs. The only way you'd be on the hook for anything personally is if the indemnity judgment was over your limit, but you said that wasn't the case.

Based on the information you've presented, you have nothing to worry about.

merula, THANK YOU for the detailed information.  You explained every detail I was concerned about.  Much appreciated!

NoStacheOhio

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They also just changed the rules on reporting judgements. If it doesn't include enough identifying information (many don't), it isn't reportable.

edit: I also had a ruling against me in an auto accident (which was total bullshit, incidentally), and it did not show up on my credit. But yeah, statutory and case law matter right up until the point that the judge or jury decides to legislate their feelings.
« Last Edit: March 14, 2017, 04:30:26 PM by NoStacheOhio »
The first step is acknowledging you have a problem, right?

lhamo

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PTF, for now.

Wherever you go, there you are

CDP45

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mistershankly, court judgments are debts the court determines you owe to another, which is why court judgments get reported to the credit bureaus. They're debts.

Insurance companies rarely litigate unless they are very very sure they'll win, or the negative consequences of losing are very very high (think asbestos workers comp claims that cumulatively total billions). I can be fairly certain your homeowners claim doesn't meet the second bar, so that tells me that it most likely meets the first one.

However, in the event that you lose the court case, your insurer will indemnify you for a loss covered by your policy. That's actually WHY they're defending you; it's to control the indemnity costs. The only way you'd be on the hook for anything personally is if the indemnity judgment was over your limit, but you said that wasn't the case.

Based on the information you've presented, you have nothing to worry about.

Or you could ask for Independent Agent this question. Hopefully you picked a good one that has decades of experience protecting their customers and recommended a reputable carrier so you wouldn't have to worry.   ...or did you just click a link and "name your own price?"

Clean Shaven

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This topic has been dormant for awhile but I thought to resurrect it to ask a question.

I am likely facing a small claims law suit against me, and my homeowners insurance will be representing me in the case.  I'm not likely to lose but who knows what happens once/if we get into court.  I've read that judgments in court are reported to the credit bureaus and adversely affect credit scores equivalent to a foreclosure of property (i.e. 7-10 years on record with the credit bureaus).  For those of you who have lost in court as defendants, have you seen a hit on your credit score?  Since my insurance is representing me, is there anything my representing lawyer can do to not have the judgment affect my credit history?

The suit doesn't bother me so much since I have sufficient liability coverage and an insurance provider that is representing me.  Additionally, the facts are in my favor and my insurance is well researched on protecting my interests (i.e. they have investigated for months and denied the claim and are prepared to defend it).  However, in the fluke chance that there is a judgment against me, I'm curious as to what my options are to protect my financial/credit status.  Any insight would be greatly appreciated!
Frankly, mistershankly, since you ask...

(just responding in order to use that.)

AlexK

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I keep hearing that lawyers will check a person's assets first to see if they are worth sueing. Is there any way to appear to be a poor person to avoid lawsuits? I own properties and that is public record but they could be shifted to an LLC or something like that. How can a lawyer find out the balance of my Vanguard account? My brother is a lawyer and I asked him this but didn't get a straight answer.

Dezrah

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This topic has been dormant for awhile but I thought to resurrect it to ask a question.

I am likely facing a small claims law suit against me, and my homeowners insurance will be representing me in the case.  I'm not likely to lose but who knows what happens once/if we get into court.  I've read that judgments in court are reported to the credit bureaus and adversely affect credit scores equivalent to a foreclosure of property (i.e. 7-10 years on record with the credit bureaus).  For those of you who have lost in court as defendants, have you seen a hit on your credit score?  Since my insurance is representing me, is there anything my representing lawyer can do to not have the judgment affect my credit history?

The suit doesn't bother me so much since I have sufficient liability coverage and an insurance provider that is representing me.  Additionally, the facts are in my favor and my insurance is well researched on protecting my interests (i.e. they have investigated for months and denied the claim and are prepared to defend it).  However, in the fluke chance that there is a judgment against me, I'm curious as to what my options are to protect my financial/credit status.  Any insight would be greatly appreciated!

Keep in mind, the lawyer hired for your case is YOUR lawyer.  Yes he was hired by the insurance company, and yes he has an incentive to get as low a settlement as possible, but ultimately he HAS to follow your instructions. 

If you told him, "I want to accept any offer made within my policy limits" he is ethically and legally obligated to accept.  If he tries the case anyway and loses an amount exceeding your limits, he and the insurance company are on the hook for the difference.  It's not an automated process though, so you still might have to sue your lawyer and insurer to see it through.

merula

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Or you could ask for Independent Agent this question. Hopefully you picked a good one that has decades of experience protecting their customers and recommended a reputable carrier so you wouldn't have to worry.   ...or did you just click a link and "name your own price?"

I'm a big believer in the independent agency system, so I'm with you in spirit, but he got the coverage he needed and what seems to be a fairly good claims experience, so why rag on him if in fact he did use an internet direct writer or some non-independent agency?

Plus, any independent agent who knows what her E&O costs WILL NOT comment on an ongoing claim, particularly one going to litigation. That kind of question goes right back to the adjuster/attorney.

I keep hearing that lawyers will check a person's assets first to see if they are worth sueing. Is there any way to appear to be a poor person to avoid lawsuits? I own properties and that is public record but they could be shifted to an LLC or something like that. How can a lawyer find out the balance of my Vanguard account? My brother is a lawyer and I asked him this but didn't get a straight answer.

Well, you can practice "stealth wealth" to discourage people from looking into your assets. That is, drive an old beater and live in a "bad" part of town and people will assume that you don't have assets without really looking. Or, you can set up a complicated shell game of LLCs and subsidiaries, but that will likely cost you more than any potential benefit from a lawsuit you may or may not ever actually face.

Keep in mind, the lawyer hired for your case is YOUR lawyer.  Yes he was hired by the insurance company, and yes he has an incentive to get as low a settlement as possible, but ultimately he HAS to follow your instructions. 

If you told him, "I want to accept any offer made within my policy limits" he is ethically and legally obligated to accept.  If he tries the case anyway and loses an amount exceeding your limits, he and the insurance company are on the hook for the difference.  It's not an automated process though, so you still might have to sue your lawyer and insurer to see it through.

Not necessarily. For one, it depends on the terms of the contract. Many contracts contain the phrases "in a settlement we  agree to" and "the insured agrees to cooperate in the investigation, settlement or defense of the suit". Also, it's entirely possible that this carrier is using in-house counsel so the attorney is actually the employee of the insurance company.

CDP45

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Or you could ask for Independent Agent this question. Hopefully you picked a good one that has decades of experience protecting their customers and recommended a reputable carrier so you wouldn't have to worry.   ...or did you just click a link and "name your own price?"

I'm a big believer in the independent agency system, so I'm with you in spirit, but he got the coverage he needed and what seems to be a fairly good claims experience, so why rag on him if in fact he did use an internet direct writer or some non-independent agency?

Plus, any independent agent who knows what her E&O costs WILL NOT comment on an ongoing claim, particularly one going to litigation. That kind of question goes right back to the adjuster/attorney.


An independent agent is YOUR advocate, not the carriers, and the least they can do is explain similar claims scenarios and raise questions on the claims-handling, and of course answer questions about limits and how the policy could respond, and the responsibilities of the carrier.

Say you file a claim and the carrier rejects (erroneously), what's your next move if you went through a website? How would you have any idea if the denial was valid?

I'm going to rag on anyone who chooses to forego competent advice to save a few bucks, and then gets no help when something goes wrong, especially when the product they bought was to cover for something that went wrong! lol

caracarn

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caracarn, the thing about insurance claims and coverage is that the story can change dramatically based on one tiny detail that would be of no interest to anyone who doesn't get involved with this stuff for a living. (And, Cathy would know better than me, but I think the same could be said of the law.)

The facts as you've presented them don't make sense to me. They make sense to you, and there's probably a small detail that you're not sharing or not aware of that completely changes the story. I just want to make sure that anyone else reading this thread doesn't walk away with the assumption that buying an umbrella will mean the umbrella insurance will pay legal fees for a claim not covered by either their homeowners policy or the umbrella. That's just not how umbrellas work.

Overall, if people think that buying umbrella coverage is worth it in their situation or provides peace of mind that is worth the premium, great. That makes my job a heck of a lot easier. Just be aware of two facts:

1. The profit insurance companies make on umbrella policies is more than twice the profit they make on auto policies.
2. Insurance company profit is based on taking in more in premiums than they pay out in claims and expenses. That is, they are getting more money for the insurance than the claims experience indicates that it's strictly worth.

Merula, I had not come back and seen your reply until now.

I'd be happy to provide more details to help you understand where this makes no sense to you.  Please provide some questions I can answer.

The challenge here was that the suit was for a home that I had sold and was no longer in, therefore was not currently covered by my CURRENT homeowner's policy. 

obstinate

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Recently bumped my umbrella coverage to $5M when I moved out of my house and started renting. I'm not sure if it's because I no longer own a car or what, but it was insanely cheap! Their rental coverage is a bit more than others ($400/Y vs. $200/Y from other insurance companies). But their umbrella coverage was almost unbelievably cheap -- around $250/Y for $5M. For context, nobody else was less than $500/Y at $3M of coverage.

I thought it was too good to be true. I was talking to a few different brokers and asked one of the others to review the policy that the AIG broker was quoting me. And that other broker couldn't find any problems with it -- it even covered hired and rented autos on a drop-down basis. So I ended up buying it.

Hopefully I'll never have to figure out how much it's worth.

BlueMR2

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Re: Anyone ever been sued for liability?
« Reply #88 on: March 16, 2017, 07:35:02 AM »
It's pretty standard to go after anyone who might be even tangentially involved in whatever occurred. It's legal, and happens all the time. I lost a traffic-related suit because someone changed lanes into me, then crossed into opposing traffic. They argued I was at fault because I didn't let the first person over (mind you, I didn't see a turn-signal, and had the right of way). The actual law also matters a lot less than it should it a court of law.

Heh, I was threatened with a lawsuit (by a company not just a simple deranged individual) after stopping to help a guy that was run off the road by a truck.  The company's property (a portable street sign) was hit by the car that was run off the road and they just went down the list of everyone that was there trying to get money out of all of us.

And of course, every accident my parents have ever been in (4 of them over all the years) they were sued right as the statue of limitations would have run out. 

In all cases above the insurance company just took care of it and it went away without exceeding our limits.

patchyfacialhair

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Following.

I've seen this scenario a not-insignificant number of times working for an insurance company.

Lots of folks who have responded before me are spot on. Sure there are scenarios where someone claims $$$ in damages, their lawyer sees you have only $ for coverage, and settles for $, but there are also scenarios where they will seek a settlement in excess of your limits. Some states protect certain types of assets (primary home or IRAs for example), so consulting with a lawyer as well as a good insurance agent can cover most bases.

That being said: you can still get a $5M umbrella and cause $10M damage. You may have prepared by moving assets through a shell game and/or contributing to protected retirement accounts. Some folks may end up with a judgment against them for future wages. It's extremely unlikely for scenarios like this to happen, but also keep in mind that there's no such thing as being protected 100%, at least in the US. Evaluate your risk, see how much the insurance is, and if it's worth it to you, then it's worth it to you.

Spork

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This is a patchy memory of a 10 year old.  That means I probably didn't know all the facts then... and 40+ years have gone by and whitewashed what I did know.

My sister was involved in a traffic accident that was her fault.  She injured someone pretty badly.  (Think: Passenger on a motorcycle getting launched through the air.)  They sued for what my child brain thought was an insane amount of money.  I can't for the life of me remember what that amount was.... but the guy in question did have a difficult recovery and probably some amount of permanent disability.

Whether that amount was above my parents' coverage or not ... I can't say.  They did have an umbrella policy and the insurance company did "just handle it."  I believe there was a settlement for less than the lawsuit.

My limited understanding of umbrella insurance is not just that you have more coverage.  It's also that the insurance company brings their A team to the table.  If they're on the hook to lose $5M, they're much more likely to bring in the larger guns to fight.
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honeybbq

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There are two scenarios in the universe when you can get royally screwed and bankrupted for no fault of your own.
1. Medical reasons.
2. Lawsuits.

I have always kept medical insurance and keep umbrella insurance as well. I have sustantial-ish assets and don't want them seized because someone is greedy or sees an opportunity to make easy money.

CptCool

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I keep hearing that lawyers will check a person's assets first to see if they are worth sueing. Is there any way to appear to be a poor person to avoid lawsuits? I own properties and that is public record but they could be shifted to an LLC or something like that. How can a lawyer find out the balance of my Vanguard account? My brother is a lawyer and I asked him this but didn't get a straight answer.

You can set up trusts (recommended 2 levels deep) for each property. It makes it very difficult to trace & a lawyer likely won't take up a random case against you as they won't immediately see that you own the properties. The maintenance & cost is quite a bit less than setting up LLCs too. The only downside is you have to have friends/lawyers you can trust as trustees, or have to pay a lawyer for their services.

Just an option that may be worth looking into. Personally, I just hold a $2M umbrella policy for ~$100/year or so. This means if an opportunistic lawyer wants to sue they'd likely settle at $2M or less

Goldielocks

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I do think that not looking rich, and not living in a rich zip code are two huge things to do to reduce the chance of someone trying to sue for more money than insurance will cover.

Why?  Someone has to ask the lawyer to look into it, and here, that means the potential plantiff needs to think that there is something more to go after, that is worth the trouble. Same for the lawyer with a sniff test.  Most lawyers will look up your home value quickly, then decide if it is worth another 10 minutes of effort to look further.

Ok- as long as you get the "typical" insurance coverage for your area, something more than the base of $100k to $200k, which can legitimately get used up fast in an injury claim.    The other insurance company will definitely go for more money if the base damage repair / medical / job loss costs are more than an insurance coverage, and they will be out of pocket.

brooklynmoney

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Recently bumped my umbrella coverage to $5M when I moved out of my house and started renting. I'm not sure if it's because I no longer own a car or what, but it was insanely cheap! Their rental coverage is a bit more than others ($400/Y vs. $200/Y from other insurance companies). But their umbrella coverage was almost unbelievably cheap -- around $250/Y for $5M. For context, nobody else was less than $500/Y at $3M of coverage.

I thought it was too good to be true. I was talking to a few different brokers and asked one of the others to review the policy that the AIG broker was quoting me. And that other broker couldn't find any problems with it -- it even covered hired and rented autos on a drop-down basis. So I ended up buying it.

I really want an umbrella policy but I don't own a car and when I have called in the past insurers tell me that I need to buy non auto owners auto insurance which was like 1k a year to then be able to qualify for umbrella insurance. Do you have this type of insurance?

Hopefully I'll never have to figure out how much it's worth.

obstinate

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No, I dont. Call an independent broker. There are several companies that will write an umbrella policy without a backing auto policy. Off the top of my head, Chubb, USLI, and AIG all offer this. Most of the big d2c companies (esurance, geico, farmers) do not.

Spork

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No, I dont. Call an independent broker. There are several companies that will write an umbrella policy without a backing auto policy. Off the top of my head, Chubb, USLI, and AIG all offer this. Most of the big d2c companies (esurance, geico, farmers) do not.

Any idea what is difference?  I would wildly guess you either pay a little extra to make up the difference or waive the rights to the insurance coverage based on an at-fault auto accident.  But I'm just as likely to be wrong with my guess as I am to be right.
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kellyincville

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I keep hearing that lawyers will check a person's assets first to see if they are worth sueing. Is there any way to appear to be a poor person to avoid lawsuits? I own properties and that is public record but they could be shifted to an LLC or something like that. How can a lawyer find out the balance of my Vanguard account? My brother is a lawyer and I asked him this but didn't get a straight answer.

Well, you can practice "stealth wealth" to discourage people from looking into your assets. That is, drive an old beater and live in a "bad" part of town and people will assume that you don't have assets without really looking. Or, you can set up a complicated shell game of LLCs and subsidiaries, but that will likely cost you more than any potential benefit from a lawsuit you may or may not ever actually face.

I disagree that LLC protection is complicated or necessarily expensive.  Use a real estate lawyer or title company to transfer your properties to one or more LLCs that you form or have formed in states with strong privacy laws for shareholders (Delaware, Nevada, Wyoming are the big three).  Tada, the equity in your properties is shielded from a lawyer poking around to see if you are worth pursuing in connection to a frivolous lawsuit.  Potential costs include real estate transfer costs in your area, lawyer/title company costs for the LLC formation and property transfer, yearly LLC fees and your personal benefit/risks analysis of a due on sale clause being triggered on a property if there is a mortgage loan held in your personal name. 

Personally, in my area LLC annual registration fees are $50/year for each LLC, there is no real estate transfer tax and due on sale clauses appear to be as common (and as talked about) as white whales so LLCs are an additional useful piece of asset protection for me at low cost.  But if you live in an area with a 2% transfer tax or California with its $800-$12.5k yearly LLC fees, it may not be for you.   

goldensam

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What is a sufficient amount of uninsured motorist coverage? I currently have $50k/$100k for UIM personal injury.

brooklynmoney

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Thanks! I'm going to call ASAP. I had been trying to deal with the consumer insurance companies like State Farm before, so this sounds more promising.