Understanding in an Auto Accident - Why Who You Hit Matters

From Insurance for Dummies by Jack Hungelmann

 You’re on your way to work. You’re running behind schedule. You decide to run a yellow light. But just before the intersection it turns red. You slam on your brakes but it’s too late. You broadside another vehicle, right in the driver’s door, seriously injuring the driver. The driver is taken to emergency care, undergoes surgery, and spends a month in the hospital. Following his release, the driver spends two years in rehabilitation, in and out of physical therapy, missing two years of work. Table 3-1 shows hypothetical claim values for four different situations.

Pretty eye-opening, isn’t it? Can you imagine what the numbers would be if the driver were killed, or had a permanent disability with a lifetime loss of income? Believe me, I’m not trying to scare you, but I am trying to show you how vastly underinsured you may be for lawsuits. The most common liability limit I see when I review a prospective client’s insurance is $100,000! That’s ridiculously low.

I’m not suggesting that everyone rush out and buy $22 million or more in liability insurance. More than $5 to 10 million is generally not even available. I am suggesting that you reevaluate your coverage limit based on a combination of this new awareness, the cost and availability of higher insurance limits, and how sueable you are. See the section titled “Knowing your suability factor” to help you determine how sueable you are. I suggest that you help pay for the increased insurance costs for higher liability limits by shifting premium dollars away from less important coverages, like higher deductibles on coverage for damage to your own vehicle.