HOW MUCH AUTO INSURANCE IS ENOUGH?
Following up on our Thanksgiving discussion (where Jeff asked whether there’s any reason to choose higher liability limits, since his agent told him – erroneously – that drivers are never sued for more than whatever coverage they carry):
Matt: ‘As one of those greedy liberal trial lawyers you hear so much about, I thought I’d offer my perspective. If you have $100,000 worth of insurance and my client has, say, $500,000 worth of damages, I’m absolutely going to look to see what you have as far as assets before I settle for the $100,000. I’ll look at the house you own, the job you have, etc. in making that determination. I won’t be able to automatically see your bank statements but if I think you’ve got the assets or you’ve got the potential to have the assets (either now or paid back over a few years), I’m going to keep the lawsuit going until I get something from you personally, above your insurance limits. In fact, I’ve got a duty to my client to maximize their return. To most people, $10,000 or $25,000 is a lot of money they don’t have and I’d agree with the statement that overwhelmingly I don’t seek anything above the insurance limits. But . . . if the money is there, there’s no way I’m going to leave it on the table when my client has unpaid bills or pain and suffering just because you didn’t buy enough insurance.’
Randy: ‘I am an insurance defense attorney in VA. One important aspect of auto insurance was left out of the discussion in your most recent post. Your auto insurance is there not only to cover any liabilities but also to cover your own injuries and those of the passengers in your car, assuming you have comprehensive coverage. Also, if someone hits you and they have no auto insurance or a small policy, your auto insurance will likely cover your injuries and damages, up to your policy limits, under the uninsured / underinsured section of your auto insurance policy. Your readers should contact their insurance carriers for more information about their specific policies.’
Chris: ‘You didn’t point out the moral dimension. By buying low limits, you are wrongly forcing the injured party (and, to a certain extent, the state) to subsidize your driving. It is notable that in Europe many countries have mandatory unlimited coverage. There are problems with this, too – people tend to milk the system – but it is morally superior to buy the higher limits (and a personal umbrella on top of that).
Stephen Willey: ‘As a NYC limo/taxi operator, I certainly had more than your typical amount of interactions with insurance companies and most were not pleasant or scrupulous to say the least. I think that you might have overlooked a point that we learned through tough experience regarding liability limits. When you have minimum coverages, it is often more economical for the insurer to essentially cave in and not really pay for a maximum defense of your case, as the legal costs might exceed the limits that they have at stake. As a result, the insured receives no – or trivial – representation in their defense. You stated that most people are ‘judgment proof’ but I’m not sure I agree, especially given the current level of real estate pricing. My taxi owner partner bought his attached brownstone in Boerum Hill, Brooklyn for 90k in 1974. It is now ‘worth’ 1.5 million. His wife was involved in an accident that was clearly not her fault but they only had 10k in coverage so her carrier caved. She had to hire her own attorney to defend the accident because her house was on the line. My experience is that with high limits, the carrier takes your defense much more seriously as their assets are now on the line and not just yours. With maximum coverage, you get the senior defense attorney and not the paralegal and they aren’t nearly as quick to tell you that the case is going to be lost and you have to settle. At 10k maximum exposure, their interests and yours are not nearly as aligned as when they have 500k at stake. Even better, getting an umbrella with the same carrier for 2 million coverage for a couple of hundred dollars extra a year, really gets them on your side when claims against you come up. Now it is their ass on the line and not just yours.’
Jon Baumgardner: ‘Costco has the best auto insurance deal in New Jersey. I can’t believe you wouldn’t know that. I got my auto insurance for about half of the reptile and Progressive. The auto insurance at Costco is available in 45 states.’
The best solution to the auto insurance problem would be to have no accidents. What if your car would not start without your passing a breathalyzer test, as is being discussed? What if you had hot topless women holding up speed-limit signs to slow down passing motorists?