Will Your Insurance Be Enough?

When I’m talking to people about asset protection, they usually have a lot of questions.

Why isn’t my car insurance enough?

Why isn’t my homeowners’ insurance enough?

Why isn’t my umbrella policy enough?

When we buy these policies, we’re often told by insurance agents that we won’t need more coverage. They tell us not to worry.

And then something happens.

You get sued—and you lose. The judgment is in the millions. Let’s say it’s a $10 million judgment, which isn’t uncommon these days.

Let’s say that your insurance will cover $2 million. Where will you get the rest?

[Cue the picture of your house, your cars, your investments, your rental properties.]

Everything you own is subject to being sold to satisfy that judgment.

I’d like to say that this won’t happen to you, yet there was a case like this not long ago in Greene County, just south of Athens. The judgment was $15 million.

Even with maximum coverage on your auto and personal umbrella liability, your coverage is likely to top out at $5 million.

This case in Greene County isn’t an outlier. We’re seeing more and more judgments in the tens of millions of dollars. Why is this happening? It’s hard to pinpoint a single reason, but our litigious society, trial attorneys, and greed are certainly contributing factors.

Most of us have high expectations of our insurance without a clear understanding of what that insurance might cover. Here are just a few examples of situations where you might expect your auto or umbrella coverage to kick in—and then discover that it’s not enough.

Homeowners Liability

You have a birthday party for your son and his friend falls off the trampoline. You lend your lake house to a friend for the weekend, and someone gets injured. A tree in your yard falls over and crushes your neighbor’s car. Incidents like these are typically covered under your homeowner’s liability insurance. If the cost is greater than your homeowner’s insurance limit, umbrella insurance can offer additional coverage, but it might not be enough.

Car Wrecks

The person you hit sues you for property damage and bodily injury. If you can’t pay, you might have to take out loans or extra mortgages, which could put you in debt. You might have to sell off your assets—or a collector could take your assets from you.

Defense Costs

If you get sued, you typically have to pay lawyer fees and processing expenses. These costs can quickly add up, even totaling hundreds of thousands of dollars for a single trial. Umbrella coverage can step in to pay these fees as you defend yourself in court. If you are found at fault, the remainder of umbrella coverage may then help pay for the associated liability expense you owe. It might not be enough.

Intoxicated Party Attendee

You host a party at your house. One of your guests drinks too much. He decides to drive home intoxicated. He causes an accident on his way home from your party. Depending on where you live, you could be partially liable for his expenses. A lawyer could claim that you over-served him alcohol, didn’t offer him to stay the night, or didn’t take his keys so he couldn’t drive.

Dog Bites

You take your dog out for a walk, and another dog agitates him. He and the dog get into a fight, and your dog bites that dog. He also bites the other dog’s owner, who is trying to pull the dogs apart. This would cause bodily injury both to the owner and the dog. If your dog bit first, you could be on the hook for medical expenses, lost wages, and even pain and suffering.

Pain and Suffering

If you are found at-fault for some sort of incident, you can also be sued for “pain and suffering.” Judgments in cases like these can run into hundreds of thousands if not millions of dollars.

Volunteering

Someone you serve through a charitable or religious organization can come after you for negligence or inappropriate behavior. Although some charitable organizations will help pay for this, you could be personally liable.

If it sounds like I’m trying to scare you, I am. I want you to know what’s at stake.

Let’s talk about the risks and what you can do to mitigate them. Just give me a call.