A few months ago, one of my friends got into a 5 car pile-up. His was the last car and he was deemed "at fault". The details are a little sketchy, but the net result is that he was deemed responsible for all of the property damage of all the cards in front of him. The total damage claim was about 120k. He carried the state minimum "property damage liability" coverage of 25k and is on the hook for the rest of it.
Looking at that example, I quickly maxed my auto-insurance liability coverages to the max available limits. In fact, I increased my "property damage liability" coverage to 500k - thinking "what if I hit a bugatti"?
Now that I am thinking again about it, I can clearly see the irrationality of maxing out the liability coverages and paying ~$200 per month in auto-insurance while driving < 5000 miles per year in both of our cars combined.
We obviously need coverage against the scenarios like my friend faced. And at the same time - buying insurance for extremely rare scenarios is bad risk management.
So what is your auto insurance limit? liability? property damage? medical? etc. Any rationale behind these limits?
puddonhead said: He carried the state minimum "property damage liability" coverage of 25k and is on the hook for the rest of itDoes each other individual plan on suing him in small claims or what ?
thinking "what if I hit a bugatti I change lanes if I find myself behind an Aston Martin, Ferrari, Maybach, or such
better to check out what $1M umbrella policy costs. it will require a certain amount of auto insurance, could be less than what op just maxed to. but it will cover more situations.
>> Does each other individual plan on suing him in small claims or what ?
Apparently the police report stated something to the effect that my freind hit car A after it stopped, which caused Car A to hit Car B, which in turn hit Car C etc. etc. There was a lawsuit which, apparently, his insurance company settled agreeing to pay up to his coverage limit. Somehow he is now on the hook for the rest of the money.
I don't have any more details on this. It is obvously not a pleasant topic to discuss and it is pretty awkward to dig into the details other than the information that he volunteered.
Crazytree
Senior Member - 7K
posted: Oct. 9, 2009 @ 12:42p
maxed out liability, property damage and UM/UIM.
personally I think UM/UIM is the most important part of any insurance coverage.
puddonhead said: ...His was the last car and he was deemed "at fault". The details are a little sketchy, but the net result is that he was deemed responsible for all of the property damage of all the cards in front of him...
Wow, what state are you in? As I understand it, here in California, when there's a multi car pile up, each driver is responsible for the car that his/her car hit.
To answer your question, I carry 100K for property damage (lots of expensive cars here in Ca.) The state minumum is unbelievably only $5K. I was hit by someone with the minimum and sustained only moderate damage, and the repairs and car rental costs were over $4K (of course I also carry uninsured/underinsured motorist coverage).
>> Wow, what state are you in? As I understand it, here in California, when there's a multi car pile up, each driver is responsible for the car that his/her car hit.
The accident happened somewhere in upstate New York. I am in CT.
puddonhead said: >> Does each other individual plan on suing him in small claims or what ?
Apparently the police report stated something to the effect that my freind hit car A after it stopped, which caused Car A to hit Car B, which in turn hit Car C etc. etc. There was a lawsuit which, apparently, his insurance company settled agreeing to pay up to his coverage limit. Somehow he is now on the hook for the rest of the money.
I don't have any more details on this. It is obvously not a pleasant topic to discuss and it is pretty awkward to dig into the details other than the information that he volunteered.
This doesn't sound right...check with an attorney or research the laws, but I believe a driver is required to leave sufficient room between their car and the car in front of them so if they get hit from behind, they won't hit the car in front of them. It sounds to me like the insurance company knew they'd be paying out 25K regardless so they paid, washed their hands of additional liability, and left your friend to fend for himself.
Interesting scenario. As poster above, I thought OP would be liable to Car A only. Is it OP's fault that Car A was very close to Car B? Is OP's insurance company paying 25k to remove itself from the lawsuit and have OP fight for the remaining balance?
Were all the 5 cars totaled (for $120K)? I understand Car A being totaled, but even Car B, C and D??? Seems odd...
>> Were all the 5 cars totaled (for $120K)? I understand Car A being totaled, but even Car B, C and D??? Seems odd. Not sure of the details. Just speculating - may be there were medical expenses involved too. I was not in the accident site and was not involved in the whole process anywhere - so not sure of the details.
Snyder81 said: puddonhead said: >> Does each other individual plan on suing him in small claims or what ?
Apparently the police report stated something to the effect that my freind hit car A after it stopped, which caused Car A to hit Car B, which in turn hit Car C etc. etc. There was a lawsuit which, apparently, his insurance company settled agreeing to pay up to his coverage limit. Somehow he is now on the hook for the rest of the money.
I don't have any more details on this. It is obvously not a pleasant topic to discuss and it is pretty awkward to dig into the details other than the information that he volunteered.
This doesn't sound right...check with an attorney or research the laws, but I believe a driver is required to leave sufficient room between their car and the car in front of them so if they get hit from behind, they won't hit the car in front of them. It sounds to me like the insurance company knew they'd be paying out 25K regardless so they paid, washed their hands of additional liability, and left your friend to fend for himself.
I wouldn't take just a couple posts on a forum talking about "I don't think there is such a law" at much word. On the other hand, some guy talking about his following too closely ticket that he got after rear-ending someone is a bit more important, to me. One would think that each driver would get the same ticket for consequently following too close to the person they rear-ended. I do think you are right about the ins. co washing their hands however.
rama13
Member
posted: Oct. 9, 2009 @ 2:23p
As demonstrated by the OPs story, having higher limits can be beneficial by keeping your insurance company invovled. If you have higher limits, your company (and specifically their lawyers) have more incentive to fight on your behalf. In the OPs story, the insurance company paid and ran quickly because the limit was so low.
Obvisously though, you need to find a balance so that you're not overpaying for coverage you don't need. For me, I carry 300,000 coverage because that's about what all my assets are worth (house, cars, personal property, cash investments). As suggested earlier, if you need higher coverage, look into an umbrella policy. They are cheap for the coverage that you get, but insurance companies require that you already maintain certain limits on your homeowners and auto policies.
>> I carry 300,000 coverage because that's about what all my assets are worth (house, cars, personal property, cash investments)
Apologies for being thick here - but I dont understand the logic behind carrying coverage equal to your assets. If you have a liability for X - and your coverage is Y - then you are on the hook for (X-Y) if X > Y. If you have some assets (lets say Z) then X-Y may be taken from there.
The only reason why I see assets being a factor is if you dont have any assets - then you have nothing to protect and you have nothing to fear from a lawsuit. If you have "some" assets that you want to protect - then you need to carry liability limits which will be sufficient to cover your likely liability. i.e. presence of assets should be a binary indicator to determine if you need "state minimum" or "good coverage".
i.e. irrespective of whether you have $300k or $500k (both are significant figures that you would probably want to protect) - I believe that should not be a factor to determine whether you carry $300k or $500k liability coverage.
We've always carried a $1 million dollar umbrella policy, when rolled in with the same company covering your home (and auto if possible), they're dirt cheap. You're covered if you cause a semi with a load of Mercedes to overturn and as mentioned, there is the belief that the more the insurance company stands to lose, the more they will fight for you.
I keep mine low because I dont have many assest at this time and in the unlikely event I am hit with a huge judgement good luck trying to cash that one in.
OFFascist said: I keep mine low because I dont have many assest at this time and in the unlikely event I am hit with a huge judgement good luck trying to cash that one in.
If you happen to be in a state that allows this - then wont your salary be garnished for the rest of your life?
Just to be clear - I have no idea about your specific scenario - but isn't that something we, monthly-paycheck guys, need to consider?
From an INSURANCE standpoint, the person that caused the entire accident is at fault for everyone. However, as far as the driving laws go, each person that hit the other would be at fault for ACDA (Assured Clear Distance Ahead). YMMV on state laws, but that's Ohio.
99% of the time, the MINIMUM liability coverage limits to have an umbrella policy is $250,000/$500,000 ($250K per person up to a total claim of $500K) on autos and $300,000 for home/renters. This coverage does NOT cover PROPERTY damage; just medical claims to others and if you're sued.
State minimum coverage varies from state to state, but in Ohio, the minimum is $12.5K/$25K/$7.5K. For those who don't know how that works, that means if you're at fault for an accident/claim, your insurance company will pay out a maximum of $12,500 per person for liability/medical to each person involved (NOT YOU) up to a total claim of $25,000; they will pay out up to $7500 for property damages to those involved (again, NOT YOU/YOUR CAR).
I had an accident 2 years back (drove off the road into a ditch) and was taken via ambulance to a local hospital. My bills were $20,000+ for just the ride there and a few X-Rays (and 2 stitches from broken glass). My auto insurance picked up $2000 of that because that was my medical limits. Luckally, my health insurance covered the rest.
So all that said above, my coverage is $250K/$500K/$100K. I have Uninsured/under insured coverage of the same limits as well just in case I get hit by someone with state minimum coverage- my car is worth more than $7500 and I know if I have to go to the hospital for ANYTHING my bills more more than likely be more than $12,500.
I'm at 25/50k personal, 25k property and 10/20 stacked UIM. I don't really have any assets to speak of, so anything much higher then that, I'm just going nuclear.
Geico won't let me get a quote for less then 10k/20k/10k so I'm assuming those are florida state mins. UIM not required, although I remember it being required in NYS
leprechaun92
Member
posted: Oct. 9, 2009 @ 3:41p
250/500k etc... You also have to be aware, that if you have passengers in your vehicle and you get into an accident, it doesn't matter who caused it. You are on the hook for your passengers. A friend of mine got into an accident with 2 passengers and he had the minimum insurance because he is a cheapskate with only 5k medical for each person. A trip to the ER for the passengers used that up pretty quickly as you can imagine with one CT scan to check for back/neck injuries. It was very painful and time consuming for my friend to sue this person to get the rest of the medical expenses covered after the fact. If he had higher coverage limits, it would have been easier to get all the expenses covered and less straining on their relationship.
It is also not that much more to jump from 25/50k to 250/500k of insurance. I think when I changed mine after seeing what my friend was going through it was only something like $40/50 more a YEAR for 10 times the coverage.
These are all really good answers but you may want to consult your agent as well given that every person's circumstances are somewhat different.
ilikebtmoney
Senior Member - 1K
posted: Oct. 9, 2009 @ 7:07p
I'd say a lot too depends on your own personal assets. Why carry $1M of insurance if you're net worth is near nothing? They're not going to sue if there's nothing to collect on.
I carry $1.5M of auto ($500K coverage, $1M umbrella) and it doesn't cost a whole lot more than say.. 100/250. You figure, take the OP's situation, add 25MPH and besides the property damage, now you're facing a lot more potential for someone getting seriously hurt. That's what can wipe out your policy limits, FAST. Besides hospital bills.. a lifetime of pain/suffering, etc. You want the insurance company battling for you in court instead of you battling for yourself, against 5 individual cases! That would suck.
I have 100K per accident for peppery damage. It costs $4 pr year more than 50K. I drive low miles, so don't think more is necessary. Interesting to hear others have much higher coverage and about the pile up situation.
vstrt
Senior Member
posted: Oct. 9, 2009 @ 7:22p
why wouldn't umbrella cover the insured for property damage beyond the 100k covered by primary insurance?
Also,why wouldn't umbrella cover the insured's passengers?
bouledogue
Member
posted: Oct. 9, 2009 @ 8:05p
puddonhead said: >> I carry 300,000 coverage because that's about what all my assets are worth (house, cars, personal property, cash investments)
Apologies for being thick here - but I dont understand the logic behind carrying coverage equal to your assets. If you have a liability for X - and your coverage is Y - then you are on the hook for (X-Y) if X > Y. If you have some assets (lets say Z) then X-Y may be taken from there.
The only reason why I see assets being a factor is if you dont have any assets - then you have nothing to protect and you have nothing to fear from a lawsuit. If you have "some" assets that you want to protect - then you need to carry liability limits which will be sufficient to cover your likely liability. i.e. presence of assets should be a binary indicator to determine if you need "state minimum" or "good coverage".
i.e. irrespective of whether you have $300k or $500k (both are significant figures that you would probably want to protect) - I believe that should not be a factor to determine whether you carry $300k or $500k liability coverage.
What am I missing here?
Just because one has no current assets does not protect future wages from being garnished, future assets being seized, or having a lifetime of collections or lawyers reveiwing one's finances until the debt is paid.
That is why the limits should be higher than current assets plus a buffer so that one is not left with only his assets after the insurance maximums are hit.
I wonder what is the difference between PIP and Medical Payment coverages. Right now, I've 8K per person PIP which is standard but no medical. I figure myself and passengers would be covered by health insurance for med bills. Advise?
bouledogue said: puddonhead said: >> I carry 300,000 coverage because that's about what all my assets are worth (house, cars, personal property, cash investments)
Apologies for being thick here - but I dont understand the logic behind carrying coverage equal to your assets. If you have a liability for X - and your coverage is Y - then you are on the hook for (X-Y) if X > Y. If you have some assets (lets say Z) then X-Y may be taken from there.
The only reason why I see assets being a factor is if you dont have any assets - then you have nothing to protect and you have nothing to fear from a lawsuit. If you have "some" assets that you want to protect - then you need to carry liability limits which will be sufficient to cover your likely liability. i.e. presence of assets should be a binary indicator to determine if you need "state minimum" or "good coverage".
i.e. irrespective of whether you have $300k or $500k (both are significant figures that you would probably want to protect) - I believe that should not be a factor to determine whether you carry $300k or $500k liability coverage.
What am I missing here?
Just because one has no current assets does not protect future wages from being garnished, future assets being seized, or having a lifetime of collections or lawyers reveiwing one's finances until the debt is paid.
That is why the limits should be higher than current assets plus a buffer so that one is not left with only his assets after the insurance maximums are hit.
Actually, you are missing one huge thing... bankruptcy. Ever heard of getting blood from a turnip? Learn the homestead limits in your state and use them. (Non-dischargeable debts through bankruptcy are injuring someone while drinking and driving; willfully or maliciously causing a personal injury; and, causing wrongful death or personal injury while operating a car or truck under the influence of illegal drugs. Don't try this approach if you do any of those.)
>> Actually, you are missing one huge thing... bankruptcy. Ever heard of getting blood from a turnip? Learn the homestead limits in your state and use them.
Bankruptcy assumes that my liabilities have run through my insurance limits and then my assets (minus any homestead limit or any other exempt assets). That is the precise thing we are trying to avoid with an insurance - right?
I am no expert on the legal side of things - but hasn't bankruptcy become more difficult now, specially chapter 7? i.e. if you have a career, and future wages, then wont the judge still allow the creditors to claw back from there?
300/500k with 1m umbrella. Had to go higher to get umbrella. Most important though, depending on state, is un/under insured coverage. Friends thing sounds bad but unlikely to occur often, far more likely to be hit by someone with little or no insurance. 25/50 won't even cover helicopter flight and a couple of days in intensive care.
Crazytree
Senior Member - 7K
posted: Oct. 9, 2009 @ 9:54p
if you don't have UM/UIM you effectively uninsured against 25-40% of all drivers on the road.
puddonhead said: >> Actually, you are missing one huge thing... bankruptcy. Ever heard of getting blood from a turnip? Learn the homestead limits in your state and use them.
Bankruptcy assumes that my liabilities have run through my insurance limits and then my assets (minus any homestead limit or any other exempt assets). That is the precise thing we are trying to avoid with an insurance - right?
I am no expert on the legal side of things - but hasn't bankruptcy become more difficult now, specially chapter 7? i.e. if you have a career, and future wages, then wont the judge still allow the creditors to claw back from there?
No. Although there are more hoops, bankruptcy is just the same as it was before the law was passed, save for the inability to file twice in a two year period. People routinely discharge debts due to medical debts or overspending their credit cards. Auto accidents are no different. And, unless you are drunk or on drugs at the time of the accident, the debt is dischargeable. The creditor has to prove "willful" infliction of injury, which in an auto accident, short of premeditation, very difficult.
I'm not saying bankruptcy is a good option. I carry 100/300 myself, which is adequate for my area, what I drive, and what I do. I don't need the ten year hit on my credit. I think that my insurance company will go to bat for $100,000 because those limits are high enough to cause them problems. But it IS an option, and don't let anyone tell you that it isn't.
suethem said: Well, this is probably a stupid question...can someone give me a couple scenerios when you need UM/UIM?
I had a hit and run many years ago. I didn't have UM/UIM but my insurance co. paid for damages anyways.
-If ANYONE with no insurance hits you, you have ZERO coverage without it and you would have to sue to RECLAIM (yes, that means that the damages, both property and medical, are ALL out of your pocket (MEDICAL INSURANCE WON'T COVER IT BECAUSE ANOTHER PARTY IS AT FAULT FOR YOUR DAMAGES!!!!!!)) money for any of the damages. If they're an illegal, good luck seeing anything.
-If someone HAS insurance, but their coverage limits are LESS than what the damages/settlement is. IE: You have medical bills for $100,000 after an accident, plus bills for prescriptions, 4 weeks of rehab and 1 1/2 months off work for a total claim of $135,000. The person that hits you has 50/100 coverage which means that their insurance company just cuts you a check for $50K and that's it, you're responsible for the rest. Your insurance would then kick in and pay all the bills up to your limit. But if you have 50/100 coverage as well, you're gonna get screwed for $35,000 out of YOUR pocket for an accident you didn't cause. Note: this actually happened to my Mom in 2005, but she had 100/300 coverage at the time which BARELY paid all the bills for a minor accident.
-Hit-and-run: any MEDICAL coverage for anyone hurt in your vehicle (note that Uninsured Property damage is an addition add-on, and usually = to a maximum of the states minimum coverage requirements).
summerst said: These are all really good answers but you may want to consult your agent as well given that every person's circumstances are somewhat different.
Yes, I recommend the same on a yearly or biannual basis. What was good auto coverage when you were renting and single is not going to be what you need if you got married and have a house.
vstrt said: why wouldn't umbrella cover the insured for property damage beyond the 100k covered by primary insurance?
Also,why wouldn't umbrella cover the insured's passengers?
"Umbrella" is a generic term, usually sold as an excess in your liability coverage. Look up the definition of liability; it may make more sense then.
mmyk72 said: I wonder what is the difference between PIP and Medical Payment coverages. Right now, I've 8K per person PIP which is standard but no medical. I figure myself and passengers would be covered by health insurance for med bills. Advise?
It's the same thing; some companies just call it something different to make it harder for you to compare coverage yourself (IE: Online quotes) or to make you feel like you have a value in your policy.
irascible1 said: 300/500k with 1m umbrella. Had to go higher to get umbrella. Most important though, depending on state, is un/under insured coverage. Friends thing sounds bad but unlikely to occur often, far more likely to be hit by someone with little or no insurance. 25/50 won't even cover helicopter flight and a couple of days in intensive care.
Even if you drove yourself to the hospital, you spend 1 night it'll be more than $25,000 in today's medical system. And don't forget you prescriptions for the pain killers and the 3 days you had to take off work. I know I'm not gonna pay if it's not my fault, which is why I carry high limits.
Crazytree said: if you don't have UM/UIM you effectively uninsured against 25-40% of all drivers on the road.
I'd almost bet more than that. If I see a bumper sticker with their insurance company's name on it (SafeAuto, The General), I CHANGE LANES AND GET AWAY! That means they most likely have state minimum coverage and obviously don't have much money/assets to want to protect what they have. So good luck suing them to pay your medical bills!!
Good point about UM/UIM. Used to live in TX where there are lots of people driving beat up cars w no insurance. Think illegal immigrants. Several people in family had major accidents with UI drivers. Now that I'm in MA, I think there are fewer UI. But mandatory coverage is so minimal its a joke.
Wow, base on UPdownLoAD, if I don't have UM, it's better for those w/o insurances just drive away rather than give me any information. So, I can at least get my car fixed w/ my insurance company.
puddonhead said: >> Wow, what state are you in? As I understand it, here in California, when there's a multi car pile up, each driver is responsible for the car that his/her car hit.
The accident happened somewhere in upstate New York. I am in CT.
IF you friend is a NY state resident, he needs to get a lawyer.
A) NY is a no fault state.
B) Parties suing him won't be able to get any more than his covered maximum.
In massachusetts there is the safe distance requirement, but it is not iron clad. My mom was stopped and hit by a car that was going about 40 miles an hour and she was pushed into the car in front of her. Anyways it was ruled that the guy behind was 100% at fault for both her car and the guy she was pushed into due to the speed the person was going. If not for that other car in front i bet she would have been pushed 15ft+.
That said OP (or his friend) needs to talk to a laywer. His insurance limits were so low the insurance company didn't bother fighting anything because whatever happened the insurance limit was so low it wouldn't worth it for them to try to fight it. And besides it looks like op probably blew through his insurance on the first car even without the other 4 cars being damaged.
He may or may not have a legal argument that he didn't cause the rest of the damage. In any case a lawyer will be able to tell him what his best option is and if there are any state laws etc that might get him off the hook.
The difference in premium between $25k and $100k in property damage coverage is usually minimal (like $5-$10 a year). Did your friend use an insurance broker? If so, he may want to talk to the broker's professional liability insurance carrier.
Received a letter from Connecticut Dept. of Ins. yesterday. It basically states that Collision is the appropriate claim category for this hit and run and that any medical claims would have been covered under UM.
This letter specifically states "you did not have Extended Uninsured Motorist Insurance". This raises two interesting points: 1. I most definitely do remember having seen some document indicating that I had Extended Uninsured Motorist Coverage. Need to dig through the old pile again and see what comes out. 2. The way Extended UMI is mentioned makes it appear as if the decision could have been different if I "had that". Maybe I will contact them back after fishing out my old policy details ascertaining whether I had Extended UMI or not.
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