Auto Accidents: Do You Have Enough Insurance?
If you haven't done so recently, now is a good time to double check your auto insurance policy limits. Many people end up with liability coverage limits that are recommended by their insurance agents when they first buy the policy. Often, these limits have been in effect for many years, even though an individual has accumulated more assets--such as a home in the San Francisco Bay Area--and their financial picture has changed considerably.
Even the best driver runs the risk of causing a death or serious personal injury while driving a car, or being involved in an accident where he or she is blamed for a serious accident that severely injures someone. How could that happen to a good driver? Here's one example: a child runs out in front of a car without looking. Accident reconstruction tests are performed, showing that the driver was going 35, when the speed limit was 25. This can easily happen in areas where the roads are marked with limits that are low for the type of road, or where the speed limit on a road changes during a drive. When an accident causes a death of a wage earner, or causes catastrophic injuries, the liability exposure can be in the millions of dollars.
If you have little or no assets, you may not be very concerned about injury liability exposure. But if you own a home, other real estate, have savings, investments, or other assets of considerable value, an auto accident claim could wipe you out.
We have handled numerous cases over the years in which the party at fault did not have enough car insurance, and had to mortgage their home, and sell investment property as a result of a lawsuit.
So how much auto insurance should you carry? The more the better. You may not be able to buy enough insurance to fully cover a catastrophic personal injury claim, but by having high limits, you create a fund that could be a big bargaining chip in getting a "full and final" release from further claims by the injured person. Many attorneys do not want to go through the very difficult process of collecting from an under-insured person's personal assets, and may encourage their clients to accept the insurance proceeds instead of proceeding against your personal assets.
Auto liability insurance limits of $250,000 or more provide a thick layer of insulation between you and personal injury claims and do not cost that much more than lower limits. An even better choice is to purchase an "umbrella" policy. This is an additional policy that extends your liability for personal injury and wrongful death claims to a high limit, usually 1 or 2 million dollars. Umbrella policies typically only cost a few hundred dollars per year, and are well worth the investment if you have significant assets.
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