That's all the insurance
I frequently hear this type of question from my clients. Some injured people ask it because the insurance carrier for the person who caused the injury (for example, the driver at fault in a car crash) told them as much: "The limit of our insurance is $15,000, so that's all we can offer you." On the other hand, I've heard people claim that no one can sue them for more than a specific amount (such as $15,000) because that's the limit of their insurance policy.
The truth is, neither assumption is valid. Just because you have low levels of insurance coverage doesn't mean you cannot be sued for more. And if the person suing you is awarded a judgment higher than your available insurance limits, potentially that person can attach your wages, cars, bank accounts, and jewelry - even foreclose on the equity in your house. You can lose it all.
How can you protect yourself? Consult with an experienced insurance agent to create a program that gives you the amount of insurance coverage you need, at a cost you can afford. One arrangement that works well for many people is to purchase auto, boat and homeowners' policies with relatively low limits, and combine those policies with an inexpensive umbrella policy to extend coverage up to $1 million.
Also remember that there are many uninsured and under-insured motorists on the road. Consider protecting yourself and your family by getting sufficient uninsured motorist coverage. This coverage provides compensation not only for your medical bills and loss of income, but also for pain and disfigurement.
How does this insurance work? Let's say you have uninsured motorist coverage of $100,000. You are injured in an automobile accident, and the motorist causing the injury has only a $15,000 policy - not nearly enough to cover your medical bills and lost income. Once you collect the $15,000 from the defendant, you can make a claim up to an additional $85,000 against your own policy. Your insurance company then has the option of going after the defendant to get reimbursed for the amount they paid you. (Often the company chooses not to do so after evaluating the chances of ever collecting anything from the defendant.) This type of insurance is not only a good buy, but also a prudent one in light of the size of the uninsured and under-insured population.
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© 2000 Nelson C. Barry III
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