It wasn’t easy telling my parents that I’m gay. I told them at Thanksgiving. I said, ‘Mom, would you please pass the gravy to a homosexual?’ She passed it to my father. A terrible scene followed.
– Bob Smith

To say I have a lot to give thanks for barely begins to make the case. I could never adequately express it.

So let’s talk about auto insurance.

(If you want a Thanksgiving column, see Monday’s. Or the this one. Or, with a touch of unintended irony at the end, this one.)

AUTO INSURANCE

Jeff: ‘I have considered upping my liability insurance from the standard 100/300 to 500/500, so as to cover my entire net worth. But my insurance agent just told me that he has never seen anyone sued for more than their coverage. In other words, if you have $100,000 liability coverage, they settle for that. They never go over that amount and invade your savings. Have you ever heard of such a thing? I always figured everyone would go for as much money as possible. Do you think it wise for me to up my coverage to 500/500?

☞ If 500/500 doesn’t cost much more (and it shouldn’t), why not?* You’ll sleep better.

Consider financing the extra cost by shopping around for a new carrier. (I’m not going to refer to talking reptiles, but I’m sure you’ve seen the ads. And Progressive will give you price comparisons also.)

I say this not to hurt the feelings of your agent, who I expect is a nice guy, but because his advice was incomplete. Even though he hasn’t seen anyone sued for more than the limits, it certainly happens. Most people are ‘judgment proof’ – the cost of a lawsuit is not justified by what might be recovered. But even as we speak, a friend of mine, hit by a car, is suing a driver – who owns a gas station – who had only the required $10,000 coverage. It’s unclear who will own the gas station after the lawsuit.

If you own something valuable or have presumed earning power, it’s wise to take the higher limits – and a cheap umbrella policy on top of that.

The other common misconception you seem to harbor, and of which your agent seems not to have disabused you, is that the limits of your policy should somehow correspond to the size of your fortune. Not so. Whether you have a net worth of $300,000 or $11 million, if you injure someone to the tune of $2 million in a jury’s estimation, that’s roughly how much coverage you would hope to have.

*Note to those who do not speak auto insurance: ‘100/300’ coverage means $100,000 of liability coverage per person you injure, $300,000 per accident. So if you negligently plow down a Girl Scout troop, your insurer would cover up to $100,000 in damages to any given trooper, up to a maximum of $300,000 even if all 24 of them sued you. With 500/500, the maximum for any given victim – or all victims together – is $500,000.

Further note: miraculously, none of these Girl Scouts was hurt. You’ll find no ghoulish hypotheticals on this web site. But it was scary and they are suing for mental distress.

Happy Thanksgiving!

Click here (and then, ‘preview this card,’ at right, allowing a little time for it to load).

 

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