You hear the ads on the radio all the time.
“When you’re injured… it IS about the money!”
When you get into a car accident and some bonehead hits you and you are laid up unable to work and they don’t have enough insurance- sure… you want an attorney.
But flip the script for a second.
What happens when the bonehead that caused the accident was you?
Drive for enough years- you will have a couple of close calls- no matter how safe of a driver you are. Add other factors- like… I don’t know… OTHER drivers… or rain… or snow… or ice… or your cell phone ringing from your purse or the back seat… or someone coming up on your blind spot and all of a sudden what would have been a near miss isn’t.
You smash straight into Mr. Executive Breadwinner, Dad of Four, Perfect Husband- driving his Honda Pilot. Mr. Dad goes careening across the lane (after doing a 360, of course) into oncoming traffic and hits Mrs. Dance Studio owner, Mom of 3, in her Subaru Forester. Both of their cars are totaled. So is yours. Luckily none of your kids were in the car. All three of you have to go to the Emergency room in an ambulance.
When you get out of surgery – because you shattered your pelvis and your right leg- you find out that the two people that you have hit are even more banged up that you are.
Mrs. Dance Studio owner, Mom of 3 will probably not be able to dance very well – if at all– after this accident. And this was her career!
Mr. Mr. Executive Breadwinner, Dad of Four, Perfect Husband is going to need weeks of rehab after the surgeries he is having.
You’ve always thought you had good limits on your insurance. 100/300 were your liability limits- that’s more than state minimums! Right? You search your memory for what those limits even mean.
100/300 means that each person you hurt will be covered for a maximum of $100,000 worth of their bills. (The total accident caps out at $300,000).
Frantically, you think about how much the ambulance rides, the surgeries, the rehab, lost work, etc might end up costing you. Will it be more than $100,000 each? Probably.
What is going to happen if they sue you? You are just a regular person. You’re married, have two kids, own a small house. Go on one road trip vacation a year. Your daughter is going to need braces soon…. And that is your big worry! You don’t have millions of dollars… so people won’t sue you? Right?
You don’t have to be rich to get sued like you are.
Your insurance policy will pay first.
In this over simplied situation- your liability insurance would start to pay out for their medical bills, rehab, lost wages, etc. With liability limits of 100/300- you have a maximum coverage of $100,000 per person you injure in an accident- so once any one person’s bills reach that $100,000 mark- your insurance will stop paying. In this type of scenario- the bills can easily go over $100,000.
At this point- when there is lost wages, a potentially lost career, bills piling up for a family and the bread earner who can’t work, etc- the family might be motivated to file a lawsuit against you. If you have any assets at all (a home, a business, etc)- you can be forced to sell to pay a judgement. You can also be forced to pay a percentage of your future wages indefinitely until you pay off a judgement (kind of like how people pay 20% of their wages for child support- you would be paying 20% of your wages for an liability you caused years ago).
What can you do?
You can purchase insurance for these specific instances- for the once in a lifetime crazy accident that will bankrupt you situations.
It is called umbrella insurance. Sometimes you might hear it called excess liability insurance.
You can buy it in quantities of $1 million. It sits on top of your auto and home insurance policies in case you are ever found guilty of negligence or liable for something and owe a judgement and you have exhausted your auto or home liability limits.
Insurance underwriters decide how much to charge you based on your risk- for instance if you also have boats (and thus, could also cause a crazy boat accident), you will be rated more expensive. If you have teenage children that it covers (who could also cause crazy bankrupting accidents) it will cost more as well. If you have a lot of tickets on your driving record, you will be rated more expensive.
Generally speaking, a $1 million umbrella policy for just adults who have just homes and autos will cost less than $1 / day.
If you are concerned about your potential liability, your future wealth, or losing your home or other assets because of one of those once in a life time mistakes that happen every day on our roads- then an umbrella policy is something you want to ask your trusted advisor about.
Less than $1 / day- to protect your future from those crazy, life altering moments. It may be worth it for you.
Because when Better Call Saul comes after you- it IS about the money!