insurance question

Ladies and Gents,

My insurance company (who always seems to want to sell me MORE) contacted me suggesting that our automobile liability coverage is lower than the value of our house (house is about $800K). She suggests that our liability should be AT LEAST as much as the value of our house because if someone sues us for an auto accident, they could put a lean against the house.

It sounds logical. Years ago, I heard that if someone sues you because of an auto accident, their lawyers usually go for the easy money which is the amount of liability insurance you have on your car.

If this does turn out to be advisable, I intend to go out for quotes before changing my coverage.

Thanks, Jim ~~~~~~~~~~~~~~~~~~~~~ This message was posted via one or more anonymous remailing services. The original sender is unknown. Any address shown in the From header is unverified. You need a valid hashcash token to post to groups other than alt.test and alt.anonymous.messages. Visit

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Reply to
Jim Patterson
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Jim Patterson wrote in news: snipped-for-privacy@anonymous.poster:

The word you're looking for is lien, but the problem you're talking about would be a judgment against you that would be satisfied by forcing a sale of your house.

You might want to look into an umbrella liability policy that covers you for any negligence on your part, including bad driving.

You say "our house," by which I assume you mean you and your spouse. If your state allows it, you might want to look into titling your house as tenants of the entirety. This is a legal fiction that means that each of you owns 100% of the house, which in turn means that the house may not be used to satisfy a judgment against just one of you.

If you own a house worth $800K, you might want to talk to a financial advisor or a lawyer about asset protection. It might cost a couple of hundred dollars, but disinterested advice might be preferable. By disinterested I mean that the advisors won't be trying to sell you something other than their expertise.

Just suggestions.

*** I am not a lawyer, so this can't be legal advice. *** *** I am not a certified financial planner, so this can't be financial advice. ***

Reply to
Deadrat

Your agent is hustling you with a phony pitch, *even though* your limits should be *much higher*. Your agent is appealing to your greed and dishonesty.

The limits on your insurance should have nothing to do with what you're worth.

The limits on your insurance should reflect the exposure, the liability. How much harm can you cause with your car? What will your liability be if you, say, run over a child backing up in a parking lot, and cripple that child for life? Shouldn't you be capable of compensating that child, if by your error you caused such misery? What has that got to do with your lousy house equity?

You have a moral obligation to carry insurance to cover potential damages.

High limits are pretty cheap. You should have them on your auto policy, and an umbrella for millions besides. Then you will be an honest and civilized driver, instead of the crud that hit and run. Where "run" means "too broke and stupid to pay for what you did".

Reply to
Richard J Kinch

Not true in New York:

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Here's an outline of major TBE issues:
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Le 27/7/07 08:32, dans Gchqi.31643$ snipped-for-privacy@newssvr23.news.prodigy.net, « Deadrat » a écrit :

Reply to
Coatzocoalcos

You mean like Cities and States that ordain absurdly low Maximum Liability limits on themselves when they injure, maim, kill others via negligence.

Reply to
¥ UltraMan ¥

My advice is discuss it with both insurance companies if different and shop around but get it. Extra cost is minimal. I have lawyer sons who advise this as they have seen a lot of greedy people out there who think you are rich and will go for everything you've got from the smallest accident. Insurance companies will defend you but settlements often go beyond your insurance.

Reply to
Frank

Better to look at a personal liability umbrella policy. They're pretty cheap (unless you regularly do dangerous stuff), and they provide an umbrella (hence the name) of coverage for pretty much anything (other than intentional acts) that isn't covered by your other policies. A million dollar limit policy may run a couple hundred dollars per year.

Reply to
Pete C.

Richard J Kinch wrote in news:Xns997A29547FE4Csomeconundrum@216.196.97.131:

liability.

This seems a tad harsh. The liability for a worst-case accident, crippling a child for life, is essentially unlimited. One certainly has a moral obligation to carry insurance to cover potential damages, but is that obligation for the worst case? Maybe it's greater than the legal obligation set by the state, but millions?

It is not an unreasonable strategy, legally and financially, to carry insurance to cover oneself for one's net worth. I don't think it's unreasonable morally, either, but YMMV.

Reply to
Deadrat

I am not a big fan of insurance but your insurance company is suggesting something that is reasonable. For example our state requires proof of insurance to register/operate an automobile. The limits were set probably 20 years ago and never raised. So if you purchase a "standard" auto policy you are grossly underinsured if you have any sort of assets.

Reply to
George

"SteveB" wrote in news:Gxnqi.19384$ snipped-for-privacy@newsfe12.phx:

Trusts are useful things. They can help reduce estate taxes in some situtations; they can protect your privacy; they can help you avoid probate; they can give extra control over your assets when you die and if you're disabled.

They are not simple, they are not cheap, and they require maintenance. Expert legal adivce is required to get things right.

If you as the trust maker retain overall control of the trust (i.e., if it's a revocable trust), I don't believe that titling your assets in the name of your trust will give those assets much protection from judgments. Do you have information that contradicts this view?

*** I am not a lawyer, so this can't be legal advice. ***
Reply to
Deadrat
27 Jul 2007 07:13:29 -0000 from Jim Patterson :

The word is "lien", and I would ask in misc.legal.moderated. Speaking as a non-lawyer...

I wouldn't worry about it, however. If you have a huge auto-liability case, and it's settled, it's customary to settle for the policy limits unless they're ridiculously low. Furthermore, in all or virtually all states, your primary residence is exempt from bankruptcy.

Right.

A good idea in any event. The difference in premium between $2 million coverage and $1 million coverage is likely to be far, far less than the difference between $1 million and $0.

Reply to
Stan Brown

That's absurd in several ways.

The risks and liabilities of operating a vehicle have *nothing to do with* bits in a bank computer or ink on some paper in the courthouse.

The opposite strategy is actually reasonable. If you have the net worth to pay a liability, then why make the bad-odds bet of buying insurance? Your expected outcome is better going bare.

People *without* net worth are the ones who should have auto insurance, to protect those they harm. This is called "responsibility". To not be able to pay your liabilities, because you lack the net worth and/or insurance, is the very definition of irresponsibility.

If you can't afford to pay for the harm you cause, either via net worth or via insurance, then you can't afford to drive and you should not be driving. Driving without insurance or with low limits is in effect to force others to pay for your privilege, also known as "stealing". The fact that ignorant and immoral people get away with it, doesn't mean it is right. The fact that it is a probabilistic process does not change the essential immorality. The fact that it is an accident without malicious intent does not remove your moral obligation to take responsibility for your own actions. You're playing a negative lottery game, but stealing the tickets.

Reply to
Richard J Kinch

Richard J Kinch wrote in news:Xns997ABC5E6462Bsomeconundrum@216.196.97.131:

I agree that the risk of operating a vehicle has little correlation with one's net worth. Are you twice as likely to cripple someone for life if you're worth $800K instead of $400K? Of course, not. But that's not the question. If you cripple someone for life, are you more likely to pay $800K if you're worth $800K than if you're worth $400K? I don't think that's an immoral question to answer.

You're correct if you regard liability like a casino. If the odds are 1 in 800,000 that you'll cause accidents in your lifetime that garner judgments against you for $800K, then your expected loss is $1, and the smart bet is to pay no more than that for insurance. Of course, your state insurance laws probably won't allow that bet.

But that's not how people calculate risk. If your net worth of $800K were taken in a judgment against you, how much do you actually value that loss? Include working past the age you wanted to retire, forgoing college education for the kids, and so on.

No, this the definition of poverty. Those without net worth will simply not be able to satisfy the costs of disastrously injuring someone. But no one is arguing that poor people shouldn't have some minimum liability insurance. The question is about someone with a house worth $800K.

Of course, but the problem isn't calculating the harm you cause. Most people don't cause any. The problem is calculating the harm you will cause. And that is unknown.

*If* I cause someone a disaster. But what if I don't? And most people don't. Of course you should comply with your state's insurance requirements. But if you can afford more, how do you calculate how much more?

You have a very strange idea of "essential" morality. My essential morality involves what I actually do and what I can reasonably forsee myself doing.

You don't get to posit an accident. One hasn't happened yet.

I'm having trouble following this metaphor.

Answer me this. How much liability insurance should I carry? Remember that the worst thing I can do through my negligence may cost mutiple millions of dollars.

Reply to
Deadrat

Your exposure is *MUCH* higher than that. You could crash into a biological weapons shipment and cripple the entire population of California for life. Or, you could hit a military communication link and accidentally start World War III. Or, you could be personally held liable for all of the damage done by Hurricane Katrina because *YOU* wished for someone to be struck down. Shouldn't you be capable of compensating people for the misery you caused? Of course, no insurance company can offer that much coverage.

That means infinite coverage.

What's the bill going to be if I destroy the entire state of California? Or worse, just cripple everyone?

That's not a worst-case accident. A worst-case accident is more like destroying an entire state. Or galaxy.

Reply to
Gordon Burditt

If you're net worth is $800K and you don't have extra insurance, you lose all $800k when the judgment for millions comes down for crippling a child. If you're worth $800K and you have another $800K in insurance, you still lose your $800K and the insurance company pays out an additional $800K towards the multi-million dollar verdict.

Zero sum for the defendant either way.

And hence lack Financial Responsibility. There is no coincidence that many States don't call their statutes "Mandatory Insurance Statutes" but call them "Financial Responsibility" statutes.

What is the average liability award for the average traffic accident in the U$A ?

That's what actuarial statisticians are for.

They don't call them "accidents" for nothing ...

Whatever the law mandates.

Life is a gamble.

Reply to
¥ UltraMan ¥

The insurer must "defend" the insured, at their expense. That doesn't mean the defense will be superb or even excellent.

Reply to
¥ UltraMan ¥

ARe you talking about insurance?

I think cities and states were usually self-insurers, because they have enough money to pay whatever they are found to owe, and they can tax to get what they don't have. Insurance just generates the costs of paperwork and profits for the insurance company.

Reply to
mm

How much equity do you have in it? They can only get what you own, not the part the bank owns. I don't think that is much consolation, though.

I think this might be a good idea, to have more insurance if you have more assets, but that is because you can probably afford more insurance, not because of the reason he gives.

I don't agree with any of the harsh stuff Richard says, but I don't think there is any real relationship between how much insurance you need and the value of your house.

If they win in court and it's more than your car insurance, including any umbrella policy, they're going to put a lien on your house no matter how much or little your house is worth. Even if your house is worth 20,000 dollars, isn't that reason enough to pursue that part of the collections? They can get their 20 thousand minus expenses for just a few hours more work. I say this theoretically. Maybe someone with experience can tell me otherwise.

But he is a dead rat, so his advice might be rational.

You may have a lot of money, and that is a good thing, but in one way you need more insurance if you want to keep your money. In another way, anyone with any money needs the same amount of insurance. Say I have assets of 50,000 dollars and insurance of 50,000 and I do 5 million dollars worth of damage. They take my insurance and my 50,000 and which is all that I have and they can pursue me for maybe 20 more years to get more. Say you have 2 million dollars of assets and a million dollars of insurance and you do 5 million dollars of damage. They take youri insurance and your 2 million and can pursue you for maybe 20 more years too.

Of course it's very unlikely that either of us will do 5 million dollars of damage.

SAy we each do 500,000 damage, according to what the judge or jury awards, but this time you only have 300,000 in insurance.

So they take the same from me that they did in the first case, and they take "only" 300,000 from your insurance, and they then get

200,000 from your house. You probably won't have to sell. You'll just get a mortgage to pay the 200G. But it will still hurt.

Who will it hurt more, me for losing everytyhing I have but I only have 50,000, or you for losing 200G when you still have more left. I think it will hurt both of us the same, roughly, but in different ways.

Reply to
mm

They also often insure you for libel and slander, which are somewhat intentinoal, and I was hoping they would have a practical manual to go with that so I could avoid committing libel.

I wanted to know exactly what the line was, because i, my mother really, was seriously mistreated by funeral home. They violated the law also, though that would be hard to prove. (That is, it's true but I can only prove it if the jury believes me. I was able to borrow

6000 dollars from a friend, over the phone, so I actually got my my mother's body back when I expected it, but the funeral home was refusing to release her body to the airport, until I paid the expenses in my city and the city she was to be buried in. Because I was able to borrow the money, there's no other proof of this now but my word and to a minimal extent, what i told my friend.)

So I wanted to get an umbrella policy so I could speak freely, but I wanted to know the law, in practice, because I don't want to cost the insurance company money.

What should I do?

Reply to
mm

Self insurance.

Then why would the set perversely low maximum liability limits for themselves when found to be liable for harm to others?

Reply to
¥ UltraMan ¥

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