The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Gone Fishing on February 24, 2016, 12:03:09 PM
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I'm considering bumping up my deductibles to the max, and for a fleeting moment considered upping my liability coverage with the savings. Then I thought about it for moment and I couldn't think of anyone I knew or knew of that had been sued for general liability associated accidents, ect. associated with owning real estate or driving a car. Sure, I have heard crazy stories like thieves suing a homeowner because of a dimly lit stairwell they fell down and the drunk drivers who kill someone certainly have wrongful death suits brought against them if they are from means, but never a case of underinsured damages for a normal Joe. Of course, people usually don't go around televising that they are being sued, so I thought I would poll the audience and see what the collective had to offer in the way of anecdotal information on the subject.
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I was sued as the owner of a rental property when a tenant's dog bit a child. The insurance company settled and paid the victim a small amount. I didn't have to pay out-of-pocket other than future increases in rates.
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I've never had any personal experience being sued, but I'm sure some of the lawyers on here would have something to say.
A friend of mines father is a lawyer and once represented someone who was being sued because they tripped and fell on a person causing some injuries. I don't remember the result of the case, but the whole thing seemed pretty silly.
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I'm an insurance underwriter, specializing in general liability and umbrella coverage. (But for commercial insurance, not personal, it should be noted.)
I don't carry an umbrella. I carry a $300,000 liability limit on both my auto and homeowners. I feel like this is a reasonable amount given my exposures. I don't own things that are likely to cause high liability claims: trampolines, swimming pools, guns, motorcycles. I don't have a teenage driver. I don't have a ton of assets to protect.
In general, higher limits make insurance companies more money. When a coverage makes insurance companies a lot of money, it's probably not worth buying unless you know that your risk is higher than the insurance company thinks it is.
So, should your liability limit be $50,000? No, that's too low. Do you need to carry a $5M umbrella because you heard a horror story where someone slipped on a sidewalk, became paralyzed and the homeowner was sued for failing to prevent it? Probably not.
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I was sued as the owner of a rental property when a tenant's dog bit a child. The insurance company settled and paid the victim a small amount. I didn't have to pay out-of-pocket other than future increases in rates.
Probably an obvious answer...what type of insurance covered you?
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I was sued as the owner of a rental property when a tenant's dog bit a child. The insurance company settled and paid the victim a small amount. I didn't have to pay out-of-pocket other than future increases in rates.
Probably an obvious answer...what type of insurance covered you?
And why does your court system even allow this? Surely it is the responsibility of the owner of the dog?
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I was sued as the owner of a rental property when a tenant's dog bit a child. The insurance company settled and paid the victim a small amount. I didn't have to pay out-of-pocket other than future increases in rates.
Probably an obvious answer...what type of insurance covered you?
And why does your court system even allow this? Surely it is the responsibility of the owner of the dog?
Haha, welcome to the USA :-)
As to OP's question, I got sued once in connection with a minor car accident. The insurance company ended up paying the plaintiff $10K.
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I carry a $2 mil umbrella. It's pretty cheap.
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Two personal examples:
1)
Some years ago, I was involved in a highway crash during a cross-country trip a long ways from home. Nobody in either vehicle had any injuries, and while my vehicle was totaled, his large commercial vehicle was barely damaged. He was quite pleasant at the time, joking as we waited for the cops, and I didn't think anything of it. So, imagine the gut wrenching feeling I had when two or three years later, I get a random lawsuit in the mail. As I soon learned, the statute of limitations was going to be up in a matter of weeks before they filed the suit. The suit was pure bullshit. Claimed he couldn't work, etc. Also got sued by his piece of shit wife who claimed loss of company, or something like that--basically a legal maneuver for them to double the lawsuit by saying the wife (who was not in the accident at all) is being hurt by my actions. Utter bullshit. Unfortunately, at the time, I had a $50k limit, and I was now being sued by two parties each seeking damages "in excess of $50,000". I honestly don't know if that excess of $50k is just a legal thing that puts it in a different court or something like that, or if that number was tied to the fact that my insurance limit was $50k. Anyways, I was mortified that my limit had been so low at the time and I was scared I was going to be on the hook for hundreds of thousands of dollars. So what happened: it slowly got drug out (as all lawsuits do I think) over the course of 2+ years. My insurance company provided the lawyer, who I talked to a couple times on the phone, including a taped deposition. I also filled out some papers describing exactly what happened. Thankfully, I never had to travel to the state in which I was being sued (and my lawyer was based).
Eventually, I got a phone call from the lawyer saying the insurance company settled for $30k total. Quite frankly, I wanted to counter-sue for the pain and suffering I legitimately had during those two years of fear and unknown. It was just a lump in my stomach, something I couldn't shake, keeping me awake at night. But of course, what I wanted even more was to never be part of a lawsuit ever again.
Moral of the story: Your car insurance company should have your back if you're sued, and your limits will probably cover it if they get a settlement, but then again, maybe not. If I had caused actual serious medical issues, he would have been in his right to sue me for a lot more and it wouldn't look so frivolous anymore, and he could have possibly (and rightfully) gotten way more than my insurance would pay out. Since that time, I've always kept my car insurance at a $250k/$500k limit, and I carry a $1 million umbrella. If I got sued for something frivolous again, would they get more than $30k out my insurance company since I have such high limits? Maybe, but I don't really care as long as it is under my limit. The savings of cheap, low insurance went right out the fucking window the moment I was sued by the high cost of living with fear of losing everything. While I'm sure I would have still had some restless nights had my insurance limits been maxed, I doubt it would have been the same in this particular example.
2)
A few winters back, I slipped on some ice on a sidewalk in front of a person's house. Goofed up my knee in the process of falling. MRI, lots of PT, and lots of medical bills that my health insurance company had to pay. Sometime during this process, I get a letter from my health insurance company asking for details about where exactly I fell, whose house I was in front of!, and how it happened. To me, it seemed they wanted to know if they could somehow recover damages from the person whose house I was in front of who should have kept the ice clear from the sidewalk. The form never said anything specifically about that, but that is how I interpreted it. Now, technically the homeowner was at fault because I did slip on ice in front of their sidewalk, but my God!, it was my own dumb fault for falling. I was definitely not thinking of a lawsuit at all (although in a different, uninsured world, I can see how maybe I would think it....MRIs aren't cheap, people), so in the form I said I couldn't quite remember where exactly it was, which wasn't untrue. It was right around the property line between two houses, and when I fell and recovered I wasn't concerned about where exactly I was in relation to an unmarked property line. Thankfully, I never received another form or other followup about it. Had I put down an address though, who knows what would have happened...probably nothing, but maybe not. This experience did not change how I handle my insurance, but again, I already had the umbrella policy in place.
We (in the US) live in a litigious society. I try to do my part on both fronts by covering my ass with insurance and also taking personal responsibility for my own actions.
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My parents were, twice that I know of. Teenage drivers (one of them being me), fender benders, and apparently the appearance that they were a desirable target to sue.
Their insurance company settled for them, but I do know they definitely held umbrella insurance until we were all fully out of the house/on our own insurances.
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I think this may be an ongoing case, so I'm going to keep everything very vague.
I was an... indirect participant in a sporting event. A door to the area of play was not closed after all direct participants entered the area of play. There are no specific guidelines or rules as to who closes that door, only that it should be closed during play. This incident occurred during warmups. An object was propelled out of the area of play, during warmups, through the open door, and struck a person who was admittedly pretty badly injured.
She (or her health insurance) sued:
The school hosting this event between 2 other schools
The 2 schools playing in this game
The venue that this was held at (not affiliated with any of the schools)
The city that owns the venue
I was brought in for a deposition. I was not sued, nor was the organization that sanctioned the event (which I am indirectly affiliated with) or the organization that works with THAT organization (that I am directly affiliated with). However, I know for a fact that the organization was at risk of it, and I assume that they were talking about suing myself and the other 2 indirect affiliates. Ever since then, I have carried an Umbrella policy. Will it ever be worth it? I honestly hope not. But it is about $35 a year on top of my auto and rental. It isn't much. I'll take it.
(Note, I also work in Risk and in the past worked in Insurance)
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When I fell and broke my wrist my health insurance wanted to know where i fell too. I didn't tell them because i think it is bullshit to go after the owner and there wasn't any ice. I just didn't pick my foot up high enough.
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Following.
No comment, for now.
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Insurance is for low-frequency, hard to predict, high impact events. From the posts above, it sounds like liability due to personal injury fits that description.
Increases in liability coverage on homeowners, auto and umbrella policies are usually pretty cheap.
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I've always thought the minimum for liability on car insurance should be 1 million (by that I mean to say mandated by law). I think in Ontario you can have 200K. 50k liability seems so low to me especially in the US, I would think you'd want ten million!
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Our homeowners insurance has umbrella liability attached to it.
My son (age 11 at the time) rode his bike headfirst into a parked car.
Rolled his bike over the hood scratching the XF*SKDF out of it. Nice Acura, too.
We knocked on the door, after patching him up, provided our insurance information, and were covered 100%. Our deductible did not apply to liability claims, nothing out of pocket.
Not "sued" technically, but "Sue" is just the term / process used for making claims and receiving $$'s in many of these cases.
I am trying to figure out how often people try to sue for over $500k or $1million, when the insurance maxes out at $500k or $1million -- I have not yet heard of anyone being personally sued in excess of that sort of limit... have you?
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Don't know the outcome yet, but someone I know was being sued because their irrigation water supposedly caused their neighbor who has a right ofway for their driveway to slip in the mud. Don't know why you'd move to the country and expect to never encounter mud, but there you go. The plaintiff in this case apparently has a history of getting huneeds of thousands from settlement in a similar suit before moving to this location. Hoping the case was thrown out, but plenty stressful for my friend.
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I know a medical student who injured someone in a car accident. The injured person did not sue him because he had no money at that time. Several years later, he was working as a doctor in Washington State and was sued by that injured person. I do not know the amount.
I think when you do not have much money, you may get away with low liability insurance. However, when you have FU money r FIREd, you really need liability insurance and umbrella insurance.
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Yes. Car accident. With multiple vehicles and minor injuries. Multiple parties sued, dragging it out over 3 years. One minor hand injury was settled out for close to 100k (medical bills and a lost academic sports season). I had 100/300 at the time. Other parties all settled for well under limit.
Family has been sued on rental properties, always settled out of court through insurance.
Now i carry 300/500 and 1mm umbrella and thinking of raising that to 2.
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I think when you do not have much money, you may get away with low liability insurance. However, when you have FU money r FIREd, you really need liability insurance and umbrella insurance.
A good reason to utilize IRA's and other employer sponsored retirement plans, which are largely protected in lawsuits and bankruptcy.
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I think when you do not have much money, you may get away with low liability insurance. However, when you have FU money r FIREd, you really need liability insurance and umbrella insurance.
A good reason to utilize IRA's and other employer sponsored retirement plans, which are largely protected in lawsuits and bankruptcy.
What is protected from creditors depends heavily on where you are. Employee-sponsored plans like 401(k)s are protected by federal law (ERISA), while the protection for IRAs depends on a bunch of other factors. Whether and to what extent your home is protected is also a matter of location. Plus, you may need to declare bankruptcy to actually get this protection.
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My neighbor threatened to sue me because my tenant was smoking as she walked down the public street in front of the neighbor's house -- he said she could have caught his dry grass on fire had she dropped her cigarette (she didn't). He is a nut job, but that's what insurance is for. There are a lot of those out there. It is not rational.
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I have a tangentially-related anecdote:
A relative is sued for some traffic-accident related. The insurance company sends a letter notifying her she is being sued and heavily imply it may be in her best interest to have her own independent attorney take a look at it. "Well what the heck is insurance for? Aren't they supposed to protect me?" she thinks. She shows it to a friend who is a failed-lawyer (by choice, not ability) but successful philosophy professor.
He tells her that the insurance company is currently under legal obligation to represent her to the best of their ability or risk a malpractice suit if they slack off. As soon as she takes the letter to attorney, however, she has formerly contracted the services of a third party and the company is no longer under strict duty to see the case through.
His advice to her was to write a response letter along the lines of "I have complete confidence in your abilities. If, however, you do not feel up to the task... etc." Of course the insurance attorney writes back, "Oh no, we'll take good care of you. We weren't implying anything like that." Skeeves me out.
So either get your insurance and use it or be willing to hire a great defense attorney, but don't do both.
The exact nature of this law might vary among states, so just be generally cynical and suspicious of everyone and you'll be fine :P
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I was sued as the owner of a rental property when a tenant's dog bit a child. The insurance company settled and paid the victim a small amount. I didn't have to pay out-of-pocket other than future increases in rates.
Probably an obvious answer...what type of insurance covered you?
And why does your court system even allow this? Surely it is the responsibility of the owner of the dog?
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.
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I was sued as the owner of a rental property when a tenant's dog bit a child. The insurance company settled and paid the victim a small amount. I didn't have to pay out-of-pocket other than future increases in rates.
Probably an obvious answer...what type of insurance covered you?
And why does your court system even allow this? Surely it is the responsibility of the owner of the dog?
I thought umbrella policies were not needed until I went through 3 years of hell. Let me explain the situation if you feel our US court system will give you "justice".
Due to a divorce right after I relocated for a job to another state, I decided to sell the house we had just bought because I could no longer afford it after the financial changes from the divorce (alimony, much high child care because my three kids were with me 80% of the time now as a single parent). The house was built in the 70s so was not newer. Six weeks after we moved in we had a hot water supply line pop out of the compression fitting under a sink in the finished basement. Resulted in 3 inches of water in the entire basement by the time it was discovered. We filed an insurance claim and resulted in $40K of repairs. A few weeks later we had some staining on our dining room roof and worked with a roofer to have them reshingle the section as they felt it was caused by an ice dam and new ice guard etc. should improve. They obviously could not guarantee it would not leak again but told us to monitor. Obviously to do that I needed to paint the areas of the ceiling that had been stained.
When I sold the house, I included all this on the disclosure and provided documents from my insurance company, the company who dried the basement out, all the contracting documents on what was repaired and all the info from the roofer. I was told during the lawsuit by my attorneys that since these items were repaired and not pending I was not even required to disclose them so I had gone above and beyond even making them aware. They had a home inspection. Everything was as you would expect in a sale of a house and I even provided them with the inspection I had had done when I had bought the house just a year before, again, nothing I was required to do.
About a year after I had sold the house I was sent a letter from a law firm indicating the new home owners had had roof leaks and some other issues and they wanted me to contact their office. Consulting an attorney I was told to ignore the letter as they had no grounds etc. Six months later the new homeowners sued be claiming fraud on the disclosure form. They wanted $100K in damages, plus legal fees punitive damages for pain and suffering and other things totaling seven different ways they wanted money. This is when my lessons in the American legal system began.
I retained a law firm and after the initial review they said this should be pretty simple because I had disclosed all I know, had given them more than was needed, some of which pointed them right to areas that had been repaired and that their inspector had looked at etc. (at one of the briefs my attorney had used the phrase "provided a blueprint on exactly where to look if you believed there was a problem") In short no way that things were not disclosed. I explained my financial situation after the divorce and that I could not afford any high legal bills and they assured me that it would at most be $10 - $20K as they saw it but obviously could not guarantee anything. I will be clear that at the end of this I still think the team I had did they best they could with our messed up system.
We got granted a motion of summary judgement in our favor. They then turned around an appealed. When they lost that they turned around and appealed to the State Supreme Court. From start to finish the whole process took almost 3 years. In the end my legal bills were over $60K and not once did we ever step foot in a court room. This was all just filing briefs and responses and all this other crap. I found out that the burden of proof to counter sue for a frivolous lawsuit is very high and that I would probably through another $10K away if I tried that so in the end my attorney's and I decided not to go down that path. During the process I am having family and friends yelling at me that there is no way the court system would even allow this as we had done everything by the book and the buyers were able to inspect and had visited the property multiple times and we had disclosed. Things I had done to help fix my home like repainting were attempted to be used as evidence that I covered things up. General clauses in contracts like the roofer's language that there could still be a leak after a roof repair (obviously a clause printed there to help them avoid legal trouble) was attempted to be used to indicate that there could have been a leak and somehow I was supposed to know that even though I saw no evidence to indicate there was. I would have been better off not re shingling the roof because that contract would not have been there. In the end we "won" but I was dragged along by a system that makes a defendant spend gobs of money to prove that nothing happened. I get this was not a criminal trial, but a civil one, but that feeling of "innocent until proven guilty" was not there in any way as the bills kept coming each month for $3K one month then $5K the next, all the while with the apologies that they were doing everything they could to keep costs down (which I believe they were) but that they still needed to defend me because if you do not respond to suits or briefs the system automatically finds for the plaintiffs. So how is that "innocent until proven guilty". If we just responded and said we did not do it, and they could not prove that I did anything we would have lost because the system is rigged to require a defense. I could have put that money to use on my family or helping my kids through college. Instead it is gone because caveat emptor clauses in purchase agreements and such can be ignored by a legal system as they drag you through $60K of paperwork.
When I finally did get my umbrella policy after this one of the prime drivers was that I was told I could certainly have filed a claim for that money and since I was found not at fault it would certainly have been covered. (If you are sued and found guilty of fraud then the umbrella policy will not cover, which makes sense). I follow the rules and am very honest and forthright and even with that I was sued by people who seemed educated and good as well when I met them in depositions. My firm could only speculate that the other firm had to be taking the case on contingency (i.e. being ambulance chasers) because the plaintiff cost in this case is usually about 3 times higher than the defense, so their costs would have approached $200K. If it was not contingency, they may have been getting fed the line that cost did not matter because when they won I'd be paying it anyway. If that was the case, I really feel sorry for them. Of course we could not talk to each other directly once the case started so I will never know what they were being told by their attorney or what they believed.
In reality who they should have possibly sued was their inspector who may have missed signs of an aging home that needed some repairs that could cause issues (they did ignore things like covering window wells that their inspector had found and then also tried to blame me for them. We discovered this as we received their documents as part of the case). So similar to your question is it not the fault of the owner of the dog? While our court system agrees with you (as they ultimately did with us that we disclosed more than what was needed and the buyer's had ample chances to discover issues) do not lose sight of the fact that it cost you $100K just to get to the point where the party that is suing you understands that they now need to go sue the owner of the dog.
What I learned, is that a $300 a year policy could have covered me for a $60K cost. Even if I keep that policy for 100 years I would make money on it in that case. Get liability coverage. As others have said, in our litigious society when it can never actual be the fault of themselves, people will always be looking for someone to blame. I would have never thought they would blame me. I was a fool.
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I was sued as the owner of a rental property when a tenant's dog bit a child. The insurance company settled and paid the victim a small amount. I didn't have to pay out-of-pocket other than future increases in rates.
Probably an obvious answer...what type of insurance covered you?
And why does your court system even allow this? Surely it is the responsibility of the owner of the dog?
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.
Totally accurate. See my story up above.
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This is good timing because I recently finished a business law class and after all the talk of liability it made me paranoid about the low liability coverage I have for my auto insurance. ($25k/$50k I believe). I've been wondering how much car insurance I should have. I consider myself a responsible driver but obviously that won't 100% prevent accidents. I'm actually more worried about the other driver not being properly insured...
What I learned, is that a $300 a year policy could have covered me for a $60K cost. Even if I keep that policy for 100 years I would make money on it in that case. Get liability coverage. As others have said, in our litigious society when it can never actual be the fault of themselves, people will always be looking for someone to blame. I would have never thought they would blame me. I was a fool.
Holy, what a story. Really unfortunate.
(Side note: is your username a WoT reference?)
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This is good timing because I recently finished a business law class and after all the talk of liability it made me paranoid about the low liability coverage I have for my auto insurance. ($25k/$50k I believe). I've been wondering how much car insurance I should have. I consider myself a responsible driver but obviously that won't 100% prevent accidents. I'm actually more worried about the other driver not being properly insured...
What I learned, is that a $300 a year policy could have covered me for a $60K cost. Even if I keep that policy for 100 years I would make money on it in that case. Get liability coverage. As others have said, in our litigious society when it can never actual be the fault of themselves, people will always be looking for someone to blame. I would have never thought they would blame me. I was a fool.
Holy, what a story. Really unfortunate.
(Side note: is your username a WoT reference?)
25/50 is NO sufficient! 100/300 minimum.
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25/50 is NO sufficient! 100/300 minimum.
Yeah, that's what I set up when I first got my own insurance a few years back. Being frugal of course I went with the cheapest coverage, but now that I know more I definitely need to increase it.
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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.
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Following.
(giant house-selling shitstorm)
Ye gads, what a mess! My sympathies. I've believed that you should disclose everything when selling, but that almost convinces me it's better to pretend to be extremely unobservant.
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I think when you do not have much money, you may get away with low liability insurance. However, when you have FU money r FIREd, you really need liability insurance and umbrella insurance.
A good reason to utilize IRA's and other employer sponsored retirement plans, which are largely protected in lawsuits and bankruptcy.
What is protected from creditors depends heavily on where you are. Employee-sponsored plans like 401(k)s are protected by federal law (ERISA), while the protection for IRAs depends on a bunch of other factors. Whether and to what extent your home is protected is also a matter of location. Plus, you may need to declare bankruptcy to actually get this protection.
+1. This is a big advantage of retirement accounts, especially employer-sponsored plans. Assets in a qualified retirement plan are exempt from the bankruptcy estate (and therefore out of creditors' reach), with no upper limit on the value. IRA's are similarly protected but only up to a limit of about $1.2 million. State laws protecting IRAs from creditors claims (not sure how complete/accurate this is): http://moranknobel.com/news/State_Laws_Protecting_IRAs.pdf (http://moranknobel.com/news/State_Laws_Protecting_IRAs.pdf) Explanation of bankruptcy protection for qualified plans and IRAs: http://employeebenefitsblog.boselaw.com/2014/06/25/bankruptcy-protection-for-iras-and-erisa-plans/ (http://employeebenefitsblog.boselaw.com/2014/06/25/bankruptcy-protection-for-iras-and-erisa-plans/)
A practical reality that works to a defendant's benefit is that plaintiff's attorneys may initially demand more than the policy limits but then be willing to settle the case if the insurer pays out its policy limits. The time and hassle of pursuing an individual's assets isn't worth it if there is a good-sized check from the insurance company. This is especially true if the lawyer is working on a contingency-fee basis.
For most people, if you carry reasonable homeowners and auto policies and a small umbrella policy, you are good to go. If someone ever actually gets a judgment against you for more than the amount of your liability limits, you will be considering all options including bankruptcy protection. But how likely is it that will occur?
The calculus changes for business owners and people with more wealth than the average early retiree. If most of your assets are in taxable accounts, real estate, etc., creditors will be able to reach most of your assets. In this case it may make sense to have higher policy limits.
I'm actually more worried about the other driver not being properly insured...
I think people often overlook the importance of uninsured/underinsured motorist coverage. This is your way of making sure that if you are injured by a driver that does not have insurance, you can still get compensation. The coverage follows the person, not the vehicle, so if an MMM cyclist gets hit by an unsured driver, the coverage still applies.
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I think when you do not have much money, you may get away with low liability insurance. However, when you have FU money r FIREd, you really need liability insurance and umbrella insurance.
This is exactly the reason we carry the maximum amount of liability on our home and car insurance. Not only do we have FU money, our home address is on "Fancy Subdivision Lane". People assume we have piles of cash simply based on our address. Obviously, we shouldn't have bought this house, but paying a few dollars extra for insurance is a heck of a lot cheaper than moving.
DH is being sued, in the 6 figures, for a minor car accident. The suit is an obvious nuisance claim, but I'm so, so glad we have sufficient liability coverage. It's absolutely worth all the nights I've been able to sleep over the past 2 years.
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My elderly FIL was sued by a woman who walked into the side mirror of his car and bumped her elbow. (he was travelling at about 5 MPH in a parking lot and she stepped out from between two parked cars as he was passing) When she lost she appealed. His insurance company defended both suits, did the research to prove she had pulled stunts like this before, and he never paid a cent in legal fees or needed to show up in court.
My understanding is that one of the best reasons to have a good liability policy is that by extension you tend to get good legal representation. When an insurance company could be out "big bucks" they'll defend themselves, and by extension that means defending you.
We have a 2M umbrella and fairly high auto liability coverage. Our home itself doesn't have many hazards (we have no yard, or sidewalks, etc) but one bad car accident can happen to anyone and medical costs can be sky-high for those impacted. Auto risk is our main reason for our high limit. We chose our limit because it is higher than our net worth, even though that's not 100% protection - there is nothing to stop someone from suing you for 100 million so at some point you just need to figure out how big a suit you want to protect against.
SIS
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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.
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Following.
(giant house-selling shitstorm)
Ye gads, what a mess! My sympathies. I've believed that you should disclose everything when selling, but that almost convinces me it's better to pretend to be extremely unobservant.
No, I think I just got really poor luck. The disclosing actually is what helped as my defense group was able to prove that they did not rely solely on anything from me and that was was provided from me was more than adequate for anyone to find anything they felt was wrong.
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Somebody please explain what is stopping me from just walking down my street with my eyes closed after a snow day until I inevitably slip and fall in front of someone's house.
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Somebody please explain what is stopping me from just walking down my street with my eyes closed after a snow day until I inevitably slip and fall in front of someone's house.
Nice downhill run into hurting yourself; long uphill slog getting paid for it, legit or not.
Don't believe that? Okay: go for it, you moron.
[MOD NOTE: Forum Rule #1.]
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Somebody please explain what is stopping me from just walking down my street with my eyes closed after a snow day until I inevitably slip and fall in front of someone's house.
Pretty sure there are people who make a hobby, or even a "profession," of that. Except I think that they tend to just claim to have fallen, rather than actually doing it. It's just a job after all - not worth breaking your neck over.
What's stopping you... ethics? Basic human decency? The Flying Spaghetti Monster?
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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.
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Okay, let me rephrase. What are the safeguards or doctrines of tort law that prevent egregious abuse? I assume the defense typically has a playbook filled with checklists to try throw the case out or diminish the liability.
If there aren't any, why are criminals still gunning people down over $100 when they could just go fishing for insurance money?
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Somebody please explain what is stopping me from just walking down my street with my eyes closed after a snow day until I inevitably slip and fall in front of someone's house.
Pretty sure there are people who make a hobby, or even a "profession," of that. Except I think that they tend to just claim to have fallen, rather than actually doing it. It's just a job after all - not worth breaking your neck over.
What's stopping you... ethics? Basic human decency? The Flying Spaghetti Monster?
... It won't work?
What makes you "pretty sure" that it does work, either at the hobby or pro level?
Ever tried to extract some bucks from an insurance company or the like with a slip and fall claim?
Ever tried to do the same, more than once?
They have these things called 'databases'... They also require documented proof of these things called 'damages'... And they fight like uhmmm...heck... over this thing called 'liability.'
In other words, they don't need other people to be super-ethical to do just fine for themselves in this fallen world.
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Okay, let me rephrase. What are the safeguards or doctrines of tort law that prevent egregious abuse? I assume the defense typically has a playbook filled with checklists to try throw the case out or diminish the liability.
If there aren't any, why are criminals still gunning people down over $100 when they could just go fishing for insurance money?
Short answer is nothing. There's no way to prevent nuisance suits without preventing some legitimate ones, and the people who are in charge of these kinds of things are lawyers who, as a group, get paid more for more lawsuits.
Why do criminals gun down people over $100 when there are better rackets? Maybe because addiction can't wait for a court date?
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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 (http://forum.mrmoneymustache.com/real-estate-and-landlording/who-is-responsible-for-house-fire/msg847464/#msg847464) 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 (http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_3_1_meritorious_claims_contentions.html) ("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.
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... The coverage follows the person, not the vehicle, so if an MMM cyclist gets hit by an unsured driver, the coverage still applies.
Sorry to be pedantic, but this depends on where you are.
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... The coverage follows the person, not the vehicle, so if an MMM cyclist gets hit by an unsured driver, the coverage still applies.
Sorry to be pedantic, but this depends on where you are.
And also what kind of coverage you have. You can buy coverage that follows both the person AND the vehicle for permissive users. You can also buy coverage that only follows the vehicle (sometimes, depending on if your state allows it), or coverage that's just for you as a driver, if you don't own a vehicle.
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... The coverage follows the person, not the vehicle, so if an MMM cyclist gets hit by an unsured driver, the coverage still applies.
Sorry to be pedantic, but this depends on where you are.
And also what kind of coverage you have. You can buy coverage that follows both the person AND the vehicle for permissive users. You can also buy coverage that only follows the vehicle (sometimes, depending on if your state allows it), or coverage that's just for you as a driver, if you don't own a vehicle.
Thanks for the caveats. It is not "pedantic," it is accurate and precise. I was too hasty with my comment.
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Lawyer here. I do some contingency fee work and some defense work. My view is that this kind of catastrophic coverage is worth it.
I upped my limits to 250/500 once I graduated from law school and had an income. I probably waited too long to do that since potential plaintiffs will evaluate your future income stream and actual assets when deciding whether to file. If I had a home, I would have good liability coverage too.
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.
Most personal injury lawyers (well, the good ones anyway) derive a lot of satisfaction from helping people that have been screwed. We all think we would never hurt someone, but in life, it happens. So good insurance is worth it.
To the above poster re: the housing nightmare: that sucks. That really sucks.
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Never sued but I've used the liability coverage included with my homeowners policy. Long story short, a woman fell and cracked 2 teeth because of my dog. Exact quote from my insurance company after I gave them the woman's info "Well let me look at your coverage... (sees umbrella in addition to 300k of homeowners liability)... Oh you have plenty of coverage, we'll handle everything, no need to worry." And they then took care of EVERYTHING, I never heard another peep. Worth every penny of what I pay.
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Had an auto insurance contretemps several years ago. I was driving an unknown rural highway at twilight, and the driver in front of me made a poor choice (hit the brakes at 70mph instead of running over small animals crossing the road). I was following too closely, but was able to slow down to about 40 before rear-ending her. When I ran to see if she was ok, she refused to talk at all (not wrong, but very out of the ordinary for that area), and her passenger immediately started railing about how I broke her back.
My little Ford focus had some decent crumple damage on the front, while her beater van had one or two scratches.
A few months later, a letter arrives in the mail that the insurance company is being sued for medical injuries from the accident. Ok, fine, whiplash happens, MRIs are expensive, they had no insurance of any kind, whatever. This keeps on for several years-keep getting more and more notices, the amount keeps growing. Finally, the insurance company informs me that the total amount the lady is suing for is greater than my coverage, and they're dropping my policy as of today (*&%^ you State Farm!), although they will keep on taking care of this claim.
In the end, she ends up getting 2k for medical bills (she had prior back issues that she tried to blame on the accident, as well as lost wages and pain and suffering etc). Since I have gossipy relatives, come to find out her 'employment' is selling dildos and vibrators through a MLM company. Apparently, the sex plug industry in middle-of-nowhere Indiana isn't doing so hot, and she had been excitedly telling folks about her 'lucky break' in being hit by some punk kid from Chicago. Normally not a big fan of insurance companies, but I'm so glad they won this one.
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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.
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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.)
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Retired lawyer here. Happens all the time. Umbrella policies are cheap. If you have significant assets, buy one.
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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.)
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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.
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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.
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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 (http://forum.mrmoneymustache.com/real-estate-and-landlording/who-is-responsible-for-house-fire/msg847464/#msg847464) 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 (http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_3_1_meritorious_claims_contentions.html) ("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.
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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.
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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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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.
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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 (https://www.canlii.org/en/ca/scc/doc/2000/2000scc44/2000scc44.html)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 (http://forum.mrmoneymustache.com/ask-a-mustachian/anyone-ever-been-sued-for-liability/msg991741/#msg991741) 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.
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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.
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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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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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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.
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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.
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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/ (http://www.thewire.com/national/2012/12/48-percent-car-crashes-los-angeles-are-hit-and-runs/59721/)
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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/ (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.
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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...
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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.
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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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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?
£289 per annum for the car, £161 per annum for the house.
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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?
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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!
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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.
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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!
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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.
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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?"
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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.)
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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.
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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.
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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.
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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
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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.
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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.
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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.
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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.
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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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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.
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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
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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.
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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.
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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.
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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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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.
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What is a sufficient amount of uninsured motorist coverage? I currently have $50k/$100k for UIM personal injury.
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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.
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As a side note, "top of the line" aviation liability insurance coverage is 1 million smooth. Most people can only get 100k per person, 1 million per incident (and standard umbrellas exclude aviation incidents). You still don't hear of estates getting hit by lawsuits exceeding coverage despite the potentially larger claims for an aviation incident.
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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.
You have to read all the legalese to find out exactly what the differences are. Oftentimes the liability coverage for boats and aircraft are different or not present.
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I have with my homeowners insurance a $1 M liability... does that cover things like sueing? Or just things that happen in my house?
Honestly it seems silly to have $1M with a house worth 150k however when i quoted the insurance i think it only added like 10$ from not having at all to have 1M with my homeowners policy... so i went for it.
I have this:
Package - Cov E - Personal Liability
$1,000,000
And also they added complimentary :
Identity Fraud Expense
Reimburses the policyholder for certain expenses associated with identity theft, and may also come with personal assistance to victims of identity fraud. LESS-
$30,000
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As a side note, "top of the line" aviation liability insurance coverage is 1 million smooth. Most people can only get 100k per person, 1 million per incident (and standard umbrellas exclude aviation incidents). You still don't hear of estates getting hit by lawsuits exceeding coverage despite the potentially larger claims for an aviation incident.
Isn't that because of the liability reform passed back in the 90s? Prior to that, GA manufacturing had almost shut down altogether because of the exponential liability growth. (That's also why the cockpit is littered with ridiculous warning placards. "Do not walk into spinning propeller blade. Injury may occur."
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As a side note, "top of the line" aviation liability insurance coverage is 1 million smooth. Most people can only get 100k per person, 1 million per incident (and standard umbrellas exclude aviation incidents). You still don't hear of estates getting hit by lawsuits exceeding coverage despite the potentially larger claims for an aviation incident.
Isn't that because of the liability reform passed back in the 90s? Prior to that, GA manufacturing had almost shut down altogether because of the exponential liability growth. (That's also why the cockpit is littered with ridiculous warning placards. "Do not walk into spinning propeller blade. Injury may occur."
My understanding is that the liability reform only shields the manufacturers. The original issue was that manufacturers were getting hit with insane lawsuits due to someone crashing a plane. To the point where it was no longer viable to build airplanes. People were still flying them during that time, you just could not buy a new one (at any price).
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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
Nope. An independent agent is an agent with contracts with multiple insurance carriers. They are still the carrier's AGENT, and they get paid by the carrier as a percentage of the premium. So an independent agent's financial interests are aligned with the carrier's and not the policyholder's.
If you want insurance advice from someone who is NOT a party to the transaction, you want a fee-based broker or consultant. But that's not a matter of "saving a few bucks"; they typically have minimum fees in excess of the total amount the average individual pays for insurance annually.
If you go through a direct writer or an internet carrier and have a dispute, your next move is an attorney. As long as you're factoring that potential cost into the comparison, more power to you.
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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.
caracarn, I'm sorry that there's confusion here. Like I mentioned before, insurance often hangs on something so minute that it doesn't seem relevant, and that could be a million different things. It's not worth you and I going through 20 questions to figure that out; I just don't want other people to think that the facts you've presents are indicative of how umbrella policies work. Because, objectively, they're not. They worked that way in your situation because of some fact that's missing, and that you may not even know or realize made all the difference.
Liability in a homeowner's policy is not typically tied to your liability as a homeowner specifically, so that it wasn't your current home shouldn't make a difference unless there's some quirk particular to your policy.
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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.
Umbrella claims most often come from auto, less so from other liability types. This is true both in personal and commercial umbrellas.
If the carrier writes the primary auto and liability (generally homeowners/renters for personal), writing the umbrella is very very easy. They just need to contemplate the increased limit. Writing over another carrier's primary auto/liability is more difficult in two ways: first, you need to understand all of the risk of the primary (vehicles, drivers, MVR results, etc) AND you need to understand what coverage differences exist between the underlying carrier's coverage form and your umbrella form.
For example, let's say Carrier A has a policy exclusion that says that accidents that occur on Tuesday aren't covered. If Carrier A writes an umbrella over that auto policy, they're going to make sure that the umbrella also says that Tuesday accidents aren't covered.
But if you buy the auto from Carrier A and the umbrella from Carrier B, B then needs to read Carrier A's policy, find that Tuesday exclusion and make sure their policy says the same thing. Otherwise, they're probably paying ALL claims on Tuesdays, not just those that exceed the primary limit.
That added layer of difficulty is why not as many carriers write "unsupported" umbrellas. CHUBB is the king of them though.
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What is a sufficient amount of uninsured motorist coverage? I currently have $50k/$100k for UIM personal injury.
UM/UIM coverage protects YOU from damage caused by people who can't pay. Your liability limit protects other people from damage you cause.
Is your potential damage worth as much to you as other people's damage? Probably, right? So, you probably want to buy a UM/UIM limit equal to your liability limit.
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What is a sufficient amount of uninsured motorist coverage? I currently have $50k/$100k for UIM personal injury.
UM/UIM coverage protects YOU from damage caused by people who can't pay. Your liability limit protects other people from damage you cause.
Is your potential damage worth as much to you as other people's damage? Probably, right? So, you probably want to buy a UM/UIM limit equal to your liability limit.
I'm not at all a fan of uninsured motorist insurance and your advice just seems wrong especially if you don't have comprehensive and collision coverage (common for people with cheap used cars).
If you get hit by someone without insurance, your disability and health insurance (and maybe life insurance if you're really unlucky) cover you and your family. If you don't have comprehensive and collision, then Uninsured motorist coverage is only going to also cover your health insurance deductibles. If you didn't have it, everything else would be covered already. That is the only difference between having it and not. If you do have comprehensive and collision, the uninsured motorist coverage would also pay for your car.
So the absolute maximum I would carry with uninsured motorist coverage (assuming I didn't have comprehensive and collision) would be the health insurance deductibles for every passenger in your car. 5 people times $6k = $30k.
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What is a sufficient amount of uninsured motorist coverage? I currently have $50k/$100k for UIM personal injury.
UM/UIM coverage protects YOU from damage caused by people who can't pay. Your liability limit protects other people from damage you cause.
Is your potential damage worth as much to you as other people's damage? Probably, right? So, you probably want to buy a UM/UIM limit equal to your liability limit.
I'm not at all a fan of uninsured motorist insurance and your advice just seems wrong especially if you don't have comprehensive and collision coverage (common for people with cheap used cars).
If you get hit by someone without insurance, your disability and health insurance (and maybe life insurance if you're really unlucky) cover you and your family. If you don't have comprehensive and collision, then Uninsured motorist coverage is only going to also cover your health insurance deductibles. If you didn't have it, everything else would be covered already. That is the only difference between having it and not. If you do have comprehensive and collision, the uninsured motorist coverage would also pay for your car.
So the absolute maximum I would carry with uninsured motorist coverage (assuming I didn't have comprehensive and collision) would be the health insurance deductibles for every passenger in your car. 5 people times $6k = $30k.
UM/UIM is not just to cover deductibles. Merula is right that it protects you and (and your passengers) from damage caused by people who don't have enough insurance. Health insurance and disability insurance is not always going to cover everything and I wouldn't recommend trying to fight with insurance companies to get your treatment while you're also out of work and recovering from a serious injury. Health insurance and disability insurance isn't going to take into account your pain and suffering, mental anguish, and all the intangibles that come with being in a car wreck. You can disagree with the ability to recover compensation for such things when they're caused by the fault of another, but that's the system we have in place, and when there isn't enough insurance, it's terrible.
How auto insurance works varies from state to state in what it covers but to say that UIM is only going to cover your health insurance deductible is wrong.
ETA: and if you want more UM/UIM coverage to protect yourself, you may be required to have at least as much liability coverage. I can only speak for Virginia, but for my auto personal policy, I can't have more UM/UIM coverage than I have liability.
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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.
Umbrella claims most often come from auto, less so from other liability types. This is true both in personal and commercial umbrellas.
If the carrier writes the primary auto and liability (generally homeowners/renters for personal), writing the umbrella is very very easy. They just need to contemplate the increased limit. Writing over another carrier's primary auto/liability is more difficult in two ways: first, you need to understand all of the risk of the primary (vehicles, drivers, MVR results, etc) AND you need to understand what coverage differences exist between the underlying carrier's coverage form and your umbrella form.
For example, let's say Carrier A has a policy exclusion that says that accidents that occur on Tuesday aren't covered. If Carrier A writes an umbrella over that auto policy, they're going to make sure that the umbrella also says that Tuesday accidents aren't covered.
But if you buy the auto from Carrier A and the umbrella from Carrier B, B then needs to read Carrier A's policy, find that Tuesday exclusion and make sure their policy says the same thing. Otherwise, they're probably paying ALL claims on Tuesdays, not just those that exceed the primary limit.
That added layer of difficulty is why not as many carriers write "unsupported" umbrellas. CHUBB is the king of them though.
Awesome post, merula.
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Thank you Babyshark, you are absolutely right.
I have a family member who has a recurring medical condition that is often caused by either auto or workplace accidents. However, his is not, just bad luck. Once every few months, his health insurance sends him a form to complete in which he has to say that it wasn't an auto or workplace accident. This has been going on for over a decade. I can't even imagine what a hassle it'd be to have to answer each of those "yes, it's an auto accident, but the limits are exhausted".
And you can't know that every passenger you'll ever carry will have health insurance, nor what their deductible will be.
Thanks, Goldielocks. That one was easy; I basically described why I have a job. :)
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What is a sufficient amount of uninsured motorist coverage? I currently have $50k/$100k for UIM personal injury.
UM/UIM coverage protects YOU from damage caused by people who can't pay. Your liability limit protects other people from damage you cause.
Is your potential damage worth as much to you as other people's damage? Probably, right? So, you probably want to buy a UM/UIM limit equal to your liability limit.
I'm not at all a fan of uninsured motorist insurance and your advice just seems wrong especially if you don't have comprehensive and collision coverage (common for people with cheap used cars).
If you get hit by someone without insurance, your disability and health insurance (and maybe life insurance if you're really unlucky) cover you and your family. If you don't have comprehensive and collision, then Uninsured motorist coverage is only going to also cover your health insurance deductibles. If you didn't have it, everything else would be covered already. That is the only difference between having it and not. If you do have comprehensive and collision, the uninsured motorist coverage would also pay for your car.
So the absolute maximum I would carry with uninsured motorist coverage (assuming I didn't have comprehensive and collision) would be the health insurance deductibles for every passenger in your car. 5 people times $6k = $30k.
UM/UIM is absolutely critical insurance, IMHO. nawhite's interpretation of its use is not accurate. Here's why.
UM /UIM covers you in the event that another driver without sufficient coverage causes you a loss in an accident. It covers you to the extent of your UM/UIM limits, even if that other driver has pathetic limits (in my state, minimum is 15/30, which is pathetic). It essentially stands in place of the other driver's liability coverage.
Relying on your comp or collision and health insurance is not a suitable replacement for UM/UIM. Comp and collision cover damage to property (your car), not bodily injury. Health insurance covers your medical bills - or at least some of them, not your deductible or copay. You still have your wage loss, disability, pain and suffering components to address. Maybe you have some other insurance that covers some of these things. Refusing to get UM/UIM is a penny wise, pound foolish approach.
I have 250/500 liability and the same for UM/UIM, with a 1MM umbrella. The umbrella does not provide UM/UIM coverage - I am not aware of any that do.
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What is a sufficient amount of uninsured motorist coverage? I currently have $50k/$100k for UIM personal injury.
UM/UIM coverage protects YOU from damage caused by people who can't pay. Your liability limit protects other people from damage you cause.
Is your potential damage worth as much to you as other people's damage? Probably, right? So, you probably want to buy a UM/UIM limit equal to your liability limit.
I'm not at all a fan of uninsured motorist insurance and your advice just seems wrong especially if you don't have comprehensive and collision coverage (common for people with cheap used cars).
If you get hit by someone without insurance, your disability and health insurance (and maybe life insurance if you're really unlucky) cover you and your family. If you don't have comprehensive and collision, then Uninsured motorist coverage is only going to also cover your health insurance deductibles. If you didn't have it, everything else would be covered already. That is the only difference between having it and not. If you do have comprehensive and collision, the uninsured motorist coverage would also pay for your car.
So the absolute maximum I would carry with uninsured motorist coverage (assuming I didn't have comprehensive and collision) would be the health insurance deductibles for every passenger in your car. 5 people times $6k = $30k.
UM/UIM is absolutely critical insurance, IMHO. nawhite's interpretation of its use is not accurate. Here's why.
UM /UIM covers you in the event that another driver without sufficient coverage causes you a loss in an accident. It covers you to the extent of your UM/UIM limits, even if that other driver has pathetic limits (in my state, minimum is 15/30, which is pathetic). It essentially stands in place of the other driver's liability coverage.
Relying on your comp or collision and health insurance is not a suitable replacement for UM/UIM. Comp and collision cover damage to property (your car), not bodily injury. Health insurance covers your medical bills - or at least some of them, not your deductible or copay. You still have your wage loss, disability, pain and suffering components to address. Maybe you have some other insurance that covers some of these things. Refusing to get UM/UIM is a penny wise, pound foolish approach.
I have 250/500 liability and the same for UM/UIM, with a 1MM umbrella. The umbrella does not provide UM/UIM coverage - I am not aware of any that do.
Thank you Clean Shaven that's essentially what I was trying to say but it was late last night when I was writing it.
Umbrellas can provide UM/UIM coverage, I have one here in Virginia. It's because I had $500k/$1mm liability/um/uim with my old carrier and my new carrier would only write me a $500k single limit auto policy for whatever reason. I wouldn't switch to them unless they could also write me an umbrella with UIM because my husband and I are often in the car together and a $500k single limit UIM doesn't provide enough for us in my opinion.
I hope we never need these policies but I'm never going to regret having them, even if they do cost me more at the end of the day.
It's also often not as expensive as one thinks to increase your coverage. Insurance premiums are based on the risk that you'll actually have to use the policy. It's a lot less likely that you'll need that $100k coverage, so they don't charge that much more to change it from $50k to $100k.
I'm weirdly passionate about people having enough auto insurance to protect themselves and I see every day people who believe they have "full coverage" and then find out there just isn't enough money to compensate for what happened.
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I have 250/500 liability and the same for UM/UIM, with a 1MM umbrella. The umbrella does not provide UM/UIM coverage - I am not aware of any that do.
Umbrellas can provide UM/UIM coverage, I have one here in Virginia. It's because I had $500k/$1mm liability/um/uim with my old carrier and my new carrier would only write me a $500k single limit auto policy for whatever reason. I wouldn't switch to them unless they could also write me an umbrella with UIM because my husband and I are often in the car together and a $500k single limit UIM doesn't provide enough for us in my opinion.
Here's where my commercial insurance bias is a problem. On the commercial insurance side, excess UM/UIM is only required to be offered in the Umbrella in 5 states, and Virginia isn't one of those. My carrier and the other commercial carriers I know about won't even offer the excess except where it's required. The major reason is that for commercial risks, the underlying Auto policy needs to be at least $1,000,000 limit before we'll write the Umbrella, and $1,000,000 UM/UIM would be extremely high, especially considering that auto injuries to an employee are often WC.
But BabyShark does have excess UM/UIM limits. So either the requirements are different for personal insurance or there are carriers who will offer it without a legal requirement. (Or both.) My research isn't turning up any details either way.
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^ In my state, UM/UIM is sold either as an optional upgrade from a standard umbrella policy (most companies I checked with for quotes it was ~$100/yr more for the UM/UIM option on a $1M umbrella) or else UM/UIM was included as a standard coverage on the umbrella policy (USAA). Interesting this varies so much.
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Interesting. Thanks for the input on the umbrella UM/UIM -- I haven't really shopped it since starting an umbrella policy about 10 years ago, and at that time, I couldn't find anything that would provide UM/UIM.
My insurance shopping seems to start + end with inquiries into other auto carriers. In my (personal, anecdotal) experience as an insurance shopper, I end up getting auto quotes that are $500-800 higher per year than my existing carrier, and I stop asking at that point. Homeowner quotes are comparable to my existing carrier, but the auto policy being so much higher basically makes it a non-starter for me.
I'll revisit the world of insurance shopping this fall, after the last kid moves out of the house for college. We're going to move him onto his own auto policy, which will significantly decrease our insurance rates. Teenage driver meant that our auto increased nearly 3X, umbrella increased $60ish, and that was with the clean record/ driver training/ good grades discounts.
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What is a sufficient amount of uninsured motorist coverage? I currently have $50k/$100k for UIM personal injury.
UM/UIM coverage protects YOU from damage caused by people who can't pay. Your liability limit protects other people from damage you cause.
Is your potential damage worth as much to you as other people's damage? Probably, right? So, you probably want to buy a UM/UIM limit equal to your liability limit.
I'm not at all a fan of uninsured motorist insurance and your advice just seems wrong especially if you don't have comprehensive and collision coverage (common for people with cheap used cars).
If you get hit by someone without insurance, your disability and health insurance (and maybe life insurance if you're really unlucky) cover you and your family. If you don't have comprehensive and collision, then Uninsured motorist coverage is only going to also cover your health insurance deductibles. If you didn't have it, everything else would be covered already. That is the only difference between having it and not. If you do have comprehensive and collision, the uninsured motorist coverage would also pay for your car.
So the absolute maximum I would carry with uninsured motorist coverage (assuming I didn't have comprehensive and collision) would be the health insurance deductibles for every passenger in your car. 5 people times $6k = $30k.
UM/UIM is absolutely critical insurance, IMHO. nawhite's interpretation of its use is not accurate. Here's why.
UM /UIM covers you in the event that another driver without sufficient coverage causes you a loss in an accident. It covers you to the extent of your UM/UIM limits, even if that other driver has pathetic limits (in my state, minimum is 15/30, which is pathetic). It essentially stands in place of the other driver's liability coverage.
Relying on your comp or collision and health insurance is not a suitable replacement for UM/UIM. Comp and collision cover damage to property (your car), not bodily injury. Health insurance covers your medical bills - or at least some of them, not your deductible or copay. You still have your wage loss, disability, pain and suffering components to address. Maybe you have some other insurance that covers some of these things. Refusing to get UM/UIM is a penny wise, pound foolish approach.
I have 250/500 liability and the same for UM/UIM, with a 1MM umbrella. The umbrella does not provide UM/UIM coverage - I am not aware of any that do.
Thank you Clean Shaven that's essentially what I was trying to say but it was late last night when I was writing it.
Umbrellas can provide UM/UIM coverage, I have one here in Virginia. It's because I had $500k/$1mm liability/um/uim with my old carrier and my new carrier would only write me a $500k single limit auto policy for whatever reason. I wouldn't switch to them unless they could also write me an umbrella with UIM because my husband and I are often in the car together and a $500k single limit UIM doesn't provide enough for us in my opinion.
I hope we never need these policies but I'm never going to regret having them, even if they do cost me more at the end of the day.
It's also often not as expensive as one thinks to increase your coverage. Insurance premiums are based on the risk that you'll actually have to use the policy. It's a lot less likely that you'll need that $100k coverage, so they don't charge that much more to change it from $50k to $100k.
I'm weirdly passionate about people having enough auto insurance to protect themselves and I see every day people who believe they have "full coverage" and then find out there just isn't enough money to compensate for what happened.
I think you are all putting words in my mouth. I'm using the example of if you don't have any comprehensive or collision insurance but you do have disability, health and life insurance.
While driving, I am rear-ended by someone without insurance and get a concussion and break my wrist. My car is totaled.
If I don't have UIM coverage, my health insurance covers my medical bills (minus deductible) and my disability covers any expenses related to loss of work. Since I didn't have C&C coverage, I get nothing for the car. My total expenses are 1) the cost of buying another car, 2) my health insurance deductibles. Probably $10k total.
If I do have UIM coverage, all of my medical bills, up to my UIM limit, are covered by UIM and past that limit I pay my health insurance deductible and then health insurance covers the rest. My car still isn't covered since I didn't have C&C coverage even if I did have UIM coverage. My total expenses are 1) the cost of buying another car. If my medical expenses exceed my UIM coverage I'll need to pay my health insurance deductible anyway. So $4k if the medical expenses are low and $10k if they are high.
So having UIM coverage only saves me $6000 out of pocket and only if my medical expenses are less than my UIM limits. That's it!
Health insurance doesn't magically stop working just because you were injured in a car. And as long as ACA is still in place, there are no lifetime limits. It's like having an unlimited coverage amount. Given how much I pay for health insurance, I don't see the reason to pay for something else that covers the same thing.
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I think you are all putting words in my mouth. I'm using the example of if you don't have any comprehensive or collision insurance but you do have disability, health and life insurance.
While driving, I am rear-ended by someone without insurance and get a concussion and break my wrist. My car is totaled.
If I do have UIM coverage, all of my medical bills, up to my UIM limit, are covered by UIM and past that limit I pay my health insurance deductible and then health insurance covers the rest. My car still isn't covered since I didn't have C&C coverage even if I did have UIM coverage. My total expenses are 1) the cost of buying another car. If my medical expenses exceed my UIM coverage I'll need to pay my health insurance deductible anyway. So $4k if the medical expenses are low and $10k if they are high.
So having UIM coverage only saves me $6000 out of pocket and only if my medical expenses are less than my UIM limits. That's it!
^^ This is where there is some misunderstanding, I think, with what I wrote.
Comp and collision coverage have nothing to do with UM/UIM. UM/UIM is liability coverage that protects the insured (in this hypothetical, nawhite is the insured) when the other, at-fault driver lacks coverage sufficient to protect the not-at-fault insured. In this hypothetical, because the other, at-fault driver had no insurance, nawhite would be covered by his own UM/UIM for all losses caused by the at-fault driver, to the full limits of nawhite's UM/UIM coverage. These losses include damage or loss of nawhite's automobile, even if nawhite does not have comp or collision coverage.
Comprehensive coverage covers damage to the vehicle that is not the result of a collision. Examples include vandalism or a tree limb falling on the car.
Collision coverage covers damage to the vehicle that is the result of the vehicle striking something else while being driven. Example: backing the car into a post.
UM/UIM coverage does not extend or supplement comp or collision. They are separate.
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Re: Umbrellas, I definitely see personal and commercial policies being very different so that makes a lot of sense. They weren't offering me an umbrella with UM/UIM, I really had to push for it and it was realistically the only way they were getting my business so they were willing to write me one.
Health Insurance/Disability Insurance/Life Insurance isn't going to cover your pain and suffering, mental anguish, inconvenience, etc. that all come from being in an accident. If you get a concussion and you break your wrist, there are more things that come with that than medical bills. You're possibly looking at a lifetime injury to your wrist, maybe even a major brain injury from which you never really recover. There's a lot of push back on receiving money for those injuries but it's the system we've created to compensate people who have been hurt through no fault of their own. If you're ever badly hurt in a car crash, you're going to be glad there is enough insurance to compensate for your injuries. It's not a perfect system but it's what we have. It's heartbreaking when somebody is badly injured and there just isn't enough money to go around because people just don't carry enough insurance.
I'm probably a little biased because I see this every day, and while spending a little more on insurance isn't the most mustachian thing at the outset, you better believe you're thankful for it if you ever need it.
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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.
Agreed. As someone who owns a quad-plex rental, I transferred the ownership of the property to an LLC. It cost very little and the tax filing is very easy (simple pass-through entity). Things could get expensive if someone falls off the deck or down the stairs. Even with property insurance, I'm not taking that chance.
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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
Nope. An independent agent is an agent with contracts with multiple insurance carriers. They are still the carrier's AGENT, and they get paid by the carrier as a percentage of the premium. So an independent agent's financial interests are aligned with the carrier's and not the policyholder's.
If you want insurance advice from someone who is NOT a party to the transaction, you want a fee-based broker or consultant. But that's not a matter of "saving a few bucks"; they typically have minimum fees in excess of the total amount the average individual pays for insurance annually.
If you go through a direct writer or an internet carrier and have a dispute, your next move is an attorney. As long as you're factoring that potential cost into the comparison, more power to you.
Yes many independent agents earn commissions, but as you noted there are also direct fee services, but they still are the agent of the carrier even when on a fee basis (even with your implication the financial interest is aligned.) They are an agent of the carrier to be able to make material transactions, not to solely represent the interests of the carrier.
Because they are usually always aligned as an Independent. Otherwise it's like saying all the employees of a grocery store are employees of Pepsi because they sell Pepsi in the store. Plus, they can't be employees or financially bound to ALL the carriers because the carriers have competing interests, so almost by definition the independent agent needs to make the best judgment on what product to sell and sell the one best suited to their customer else open themselves up for Errors and Omissions claims.
They are employees of an independent business with the responsibility to represent their client, as also established by judicial precedent.
The problem with direct carriers is many time you wouldn't know if you should have had coverage, so do you ask an attorney to review everytime you may think you have a covered loss? Or would a better solution just be to go with an independent agent?
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What is a sufficient amount of uninsured motorist coverage? I currently have $50k/$100k for UIM personal injury.
UM/UIM coverage protects YOU from damage caused by people who can't pay. Your liability limit protects other people from damage you cause.
Is your potential damage worth as much to you as other people's damage? Probably, right? So, you probably want to buy a UM/UIM limit equal to your liability limit.
I'm not at all a fan of uninsured motorist insurance and your advice just seems wrong especially if you don't have comprehensive and collision coverage (common for people with cheap used cars).
If you get hit by someone without insurance, your disability and health insurance (and maybe life insurance if you're really unlucky) cover you and your family. If you don't have comprehensive and collision, then Uninsured motorist coverage is only going to also cover your health insurance deductibles. If you didn't have it, everything else would be covered already. That is the only difference between having it and not. If you do have comprehensive and collision, the uninsured motorist coverage would also pay for your car.
So the absolute maximum I would carry with uninsured motorist coverage (assuming I didn't have comprehensive and collision) would be the health insurance deductibles for every passenger in your car. 5 people times $6k = $30k.
UM/UIM is absolutely critical insurance, IMHO. nawhite's interpretation of its use is not accurate. Here's why.
UM /UIM covers you in the event that another driver without sufficient coverage causes you a loss in an accident. It covers you to the extent of your UM/UIM limits, even if that other driver has pathetic limits (in my state, minimum is 15/30, which is pathetic). It essentially stands in place of the other driver's liability coverage.
Relying on your comp or collision and health insurance is not a suitable replacement for UM/UIM. Comp and collision cover damage to property (your car), not bodily injury. Health insurance covers your medical bills - or at least some of them, not your deductible or copay. You still have your wage loss, disability, pain and suffering components to address. Maybe you have some other insurance that covers some of these things. Refusing to get UM/UIM is a penny wise, pound foolish approach.
I have 250/500 liability and the same for UM/UIM, with a 1MM umbrella. The umbrella does not provide UM/UIM coverage - I am not aware of any that do.
Thank you Clean Shaven that's essentially what I was trying to say but it was late last night when I was writing it.
Umbrellas can provide UM/UIM coverage, I have one here in Virginia. It's because I had $500k/$1mm liability/um/uim with my old carrier and my new carrier would only write me a $500k single limit auto policy for whatever reason. I wouldn't switch to them unless they could also write me an umbrella with UIM because my husband and I are often in the car together and a $500k single limit UIM doesn't provide enough for us in my opinion.
I hope we never need these policies but I'm never going to regret having them, even if they do cost me more at the end of the day.
It's also often not as expensive as one thinks to increase your coverage. Insurance premiums are based on the risk that you'll actually have to use the policy. It's a lot less likely that you'll need that $100k coverage, so they don't charge that much more to change it from $50k to $100k.
I'm weirdly passionate about people having enough auto insurance to protect themselves and I see every day people who believe they have "full coverage" and then find out there just isn't enough money to compensate for what happened.
I think you are all putting words in my mouth. I'm using the example of if you don't have any comprehensive or collision insurance but you do have disability, health and life insurance.
While driving, I am rear-ended by someone without insurance and get a concussion and break my wrist. My car is totaled.
If I don't have UIM coverage, my health insurance covers my medical bills (minus deductible) and my disability covers any expenses related to loss of work. Since I didn't have C&C coverage, I get nothing for the car. My total expenses are 1) the cost of buying another car, 2) my health insurance deductibles. Probably $10k total.
If I do have UIM coverage, all of my medical bills, up to my UIM limit, are covered by UIM and past that limit I pay my health insurance deductible and then health insurance covers the rest. My car still isn't covered since I didn't have C&C coverage even if I did have UIM coverage. My total expenses are 1) the cost of buying another car. If my medical expenses exceed my UIM coverage I'll need to pay my health insurance deductible anyway. So $4k if the medical expenses are low and $10k if they are high.
So having UIM coverage only saves me $6000 out of pocket and only if my medical expenses are less than my UIM limits. That's it!
Health insurance doesn't magically stop working just because you were injured in a car. And as long as ACA is still in place, there are no lifetime limits. It's like having an unlimited coverage amount. Given how much I pay for health insurance, I don't see the reason to pay for something else that covers the same thing.
You are missing the true value of a claim. Your UIM steps into the shoes of the liable party. If you are hit and break your wrist and get a concussion you might have $15,000 in medical bills. Your case, when you include your pain and suffering, loss of enjoyment of life and all that extra stuff is really worth $45,000+. Your health/disability/life policies aren't going to cover those other damages. You also get to claim your full medical bills (what the doctor actually charges) in your case but you only pay back your insurance what they actually paid the doc, less 1/3rd to share in your legal bills. So, you might pay back your health insurance $10k of that $15k. So, you pay your lawyer $15k, you pay health insurance $10k and you walk away with $20,000 because you had UIM.
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Yes many independent agents earn commissions, but as you noted there are also direct fee services, but they still are the agent of the carrier even when on a fee basis (even with your implication the financial interest is aligned.) They are an agent of the carrier to be able to make material transactions, not to solely represent the interests of the carrier.
Because they are usually always aligned as an Independent. Otherwise it's like saying all the employees of a grocery store are employees of Pepsi because they sell Pepsi in the store. Plus, they can't be employees or financially bound to ALL the carriers because the carriers have competing interests, so almost by definition the independent agent needs to make the best judgment on what product to sell and sell the one best suited to their customer else open themselves up for Errors and Omissions claims.
They are employees of an independent business with the responsibility to represent their client, as also established by judicial precedent.
The problem with direct carriers is many time you wouldn't know if you should have had coverage, so do you ask an attorney to review everytime you may think you have a covered loss? Or would a better solution just be to go with an independent agent?
https://www.thebalance.com/agents-versus-brokers-and-how-they-make-money-462383
Insurance brokers represent YOU in the transaction. Agents represent the company.
Using your Pepsi comparison, the grocery store (agent) has contracts with multiple soda companies (carriers) and offers all of their products on their shelves. If Pepsi pays the store a 15% commission on all sales, plus a $1,000,000 bonus for selling more than $10,000,000, while Coke pays 10% with no bonus, you better believe Pepsi is getting all the endcaps.
In this scenario, a broker is one of those home-delivery shopping services. You tell them what you need, they go get it for you, but they DO NOT have any contract with any soda company.
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nawhite you might want to double check your disability coverage. I've never seen a disability policy that started paying on day 1. Rather it's usually a disability that keeps you from working for more than 90 days. So there's no coverage at all for the first 90 days of your disability.
In addition, just to harp on what others have already pointed out, your analysis overlooks that you may actually suffer a long term or permanent injury for which you would otherwise be entitled to compensation. Lose an eye in a car wreck? Sure, your insurance will cover the costs of stitching that hole in your face up (after deductible), but your insurance isn't going to pay you for a lifetime of disability.
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Yes many independent agents earn commissions, but as you noted there are also direct fee services, but they still are the agent of the carrier even when on a fee basis (even with your implication the financial interest is aligned.) They are an agent of the carrier to be able to make material transactions, not to solely represent the interests of the carrier.
Because they are usually always aligned as an Independent. Otherwise it's like saying all the employees of a grocery store are employees of Pepsi because they sell Pepsi in the store. Plus, they can't be employees or financially bound to ALL the carriers because the carriers have competing interests, so almost by definition the independent agent needs to make the best judgment on what product to sell and sell the one best suited to their customer else open themselves up for Errors and Omissions claims.
They are employees of an independent business with the responsibility to represent their client, as also established by judicial precedent.
The problem with direct carriers is many time you wouldn't know if you should have had coverage, so do you ask an attorney to review everytime you may think you have a covered loss? Or would a better solution just be to go with an independent agent?
https://www.thebalance.com/agents-versus-brokers-and-how-they-make-money-462383
Insurance brokers represent YOU in the transaction. Agents represent the company.
Using your Pepsi comparison, the grocery store (agent) has contracts with multiple soda companies (carriers) and offers all of their products on their shelves. If Pepsi pays the store a 15% commission on all sales, plus a $1,000,000 bonus for selling more than $10,000,000, while Coke pays 10% with no bonus, you better believe Pepsi is getting all the endcaps.
In this scenario, a broker is one of those home-delivery shopping services. You tell them what you need, they go get it for you, but they DO NOT have any contract with any soda company.
How can you tell a broker what you need? Think most people know about the exclusions for flood and earthquake in most homeowners policies? Or that Uber driving is excluded?
You can't draw a line between the words agent and broker and who they represent, even in the article you linked it says all agents have a duty to the customer per state license regulations, and as I've mentioned also case precedent.
Also, most independent agencies have both agent and broker contracts with different carriers- I doubt there is a solely broker-only business because agency is about authority to change the contact and bind it, not being an advocate for the carriers. Independent insurance agents represent YOU the customer, and they are the customers' advocate.
Note this does NOT apply to captive employees of carriers.
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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!
Hey mistershankly, what ended up happening with this?