How much auto insurance should you have? Enough! Here are three sad but real cases. My client was on his way home from work. A young man driving his truck got distracted and didn’t see traffic stopped ahead of him in time to stop, so he pulled out into the oncoming lane thereby causing a head-on collision. A wonderful family man died a totally unnecessary death. The wrongdoer had only $25,000 of liability insurance limits, which is the state minimum. There are three sad tales here—that of the victim, that of the victim’s wife and family, and that of the man who caused the accident. My client only had $25,000 of uninsured motorist coverage (UIM). UIM coverage kicks in whenever a person is injured by an uninsured or an underinsured driver. The losses to the spouse of her sole wage earner were in the hundreds of thousands of dollars. We sued the wrongdoer. His insurance paid their limits of $25,000 and he personally had to liquidate all of his assets that would not otherwise have been retained by him had he filed bankruptcy. In other words he was stripped of all of his major assets. This resulted in a woefully inadequate help to the victim’s surviving disabled spouse, and yet cost the wrongdoer everything he had, forcing him to start over. Because there was inadequate insurance, nobody won.
In another recent case, a wrongdoer tried to take a shortcut across the oncoming lane of travel and caused a head-on collision with my client, causing serious injuries. The defendant had inadequate of liability limits although he owned property worth much more than that. His insurance company paid the liability limit and the defendant’s family had to pay a large sum representing decades of accumulation of net worth from their own personal assets. In this case, increased insurance probably couldn’t have adequately provided for the victim, his injuries being so extreme, but increased insurance would at least have protected the family finances of the man who caused the accident. One of the main purposes of insurance is to protect your assets.
In another case, my client was a pedestrian in a crosswalk. A young man made an illegal turn, crashing into her and causing serious injuries. The young man had no insurance and, since my client was not a driver, she had no insurance either, nor did she have any medical insurance. The medical bills are huge and whatever my client has may have to be used to personally pay those bills.
What are the lessons? Number one, you owe a duty to yourself, your family and every other person on the road to have adequate liability insurance. A one-day stay in intensive care or an emergency room can easily cost more then the $25,000 minimum limits. If you don’t have adequate insurance, then the injured party can reach out and take all your assets that are not exempt in bankruptcy, such as bank accounts, investment properties, and your home if it has more than $125,000 equity, your vehicles--almost everything. How much insurance should you have even if you have nothing to lose? Everyone should have at least $100,000 of insurance and should hope “the other guy” has that much or more. I advocate having at least enough liability insurance to equal your net worth. This can be accomplished by purchasing a primary policy and an umbrella policy.
Huge numbers of drivers on Washington roads (I would estimate near 50%) either have no liability insurance or have only the $25,000 minimum. The key to this problem is your underinsured motorist (UIM) insurance. Your insurance company will offer you an amount of UIM equal to your liability limits, but you should try to purchase more, or you should try to purchase an umbrella policy. If you and your family want to lose everything the best way to do it is to be uninsured or underinsured. I have an excellent pamphlet explaining automobile insurance. Just call my office; we’ll mail you a copy.