Cautionary Tale

I just saw the declarations page for a client. (The declarations page shows how much liability, PIP and UM/UIM coverage someone carries under their Auto insurance policy.) This guy had $100,000 in liability and UM/UIM.

That might be alright if it was all he could afford. But he’s kind of a big deal at work and lives in a really nice house.

I tell anyone who will listen that:

* Everyone needs at least $5M in liability coverage. It’s 's going to be enough in at least 99 percent of all collisions. (And it’s difficult to buy more than $5M from many carriers.)

* In addition to the liability coverage, you need at least $5M in UM/UIM. (UM is uninsured motorist. UIM is underinsured motorist.)

* Some umbrella policies don’t automatically extend UM/UIM. You need to make sure yours does and it’s limited to increasing just liability coverages.

* Pricing on auto insurance isn’t linear. Getting $5M in coverage only costs a little bit more than getting $1M.

Back to the story…I saw the declarations page and immediately thought of a case we just wrapped up.

Here’s a summary of the facts:

* Bad wreck.

* Significant orthopedic injuries.

* At-fault driver worked at one of the big tech companies.

* At-fault driver lived in a nice house.

* At-fault driver had a $100,000 policy.

We ended up settling the case for $500,000 more than the policy limits.

It has to be exceptionally painful writing a check for an uninsured loss or for expenses that could have been covered if more UM/UIM had been purchased.

I have never had any luck trying to save money at car washes. Every time I’ve tried to get away with X quarters the timer has run out while there is still soap on the car. And then I’ve had to put in another X quarters just to finish rinsing off the car. I could have gotten away with 1.5X quarters if I hadn’t been so tight-fisted at the outset. I think car wash owners understand human nature.

I’m not saying that insurance is rigged. (Even though it is rigged.) But I am saying that the financial consequences are just too great to purchase any less than $5M in coverage if you can possibly afford it.

(I had to re-write that sentence a couple of times because, really, you can’t afford not to have that coverage if you get into a bad wreck regardless of pre-wreck financial position.)

#insurance

#umbrella

#liability

#UM

#UIM