Liability Insurance Coverage (Cont.)
Advice on Buying Liability Insurance
If you cause an accident, you are personally responsible to pay for all vehicle damage, personal property damage, victim medical care costs, victim wage loss, and for all victims’ pain and suffering. Car accidents cause serious injuries, and the victims’ claims can easily exceed $100,000.00. If you do not purchase enough coverage, a victim can sue you and secure a verdict for the full value of all losses. If your insurance is not sufficient to pay the verdict in full, they can levy and take your bank accounts and personal property, place a judgment lien on your home, and collect the uninsured portion of their verdict from your personal wealth.
Always carry enough insurance. This determination depends in part on the personal wealth and assets you have to protect. We recommend that any driver carry at least $100,000.00 per person / $300,000.00 per occurrence in bodily injury liability coverage.
The cost of a single emergency room visit following a serious accident can approach the state’s required minimum liability coverage limit. Thus, even if you have little wealth to protect, it costs very little to increase your coverage limits above the state minimums. If you carry sufficient coverage, you can trust that your insurance carrier will have sufficient resources to resolve almost any claim that follows a typical car accident.
Excess Liability Coverage – Accessing Multiple Auto Policies
Accident victims often fail to present their claims and collect under all available insurance policies! They leave their money in the insurance company’s hands simply because they don’t know where to look for additional coverage and benefits. If the insurance coverage on the vehicle is not sufficient to pay victim claims, it is essential to look carefully to identify hidden policies that will help to fund your claims.
Later in this chapter, we discuss excess liability coverage scenarios that do not involve auto insurance, including commercial/business liability insurance (which applies when an employee causes an accident during work hours) and homeowner’s umbrella insurance. These nonauto sourcesare typically high-limits policies that provide a great deal of money to cover your losses and expenses. In serious and catastrophic injury cases, always look for these hidden policies, as they provide large money sources to cover your claims.
Example: Hidden Policy Pays $550,000.00!
We represented Carol F., who approached us following an accident. She and her husband had already secured a policy limits offer of $100,000.00. They simply wanted our advice to confirm that this was the only money available. After performing an asset search, we determined that the at-fault driver had very little wealth and no real estate to pursue. However, we looked closely at the collision facts and noticed that the at-fault driver was driving a late-model pickup truck at lunchtime near downtown Raleigh. On suspicion that he may have been employed, we compelled the liability insurer’s legal representatives to secure a sworn affidavit from the at-fault driver disclosing the nature of his journey and his point of origin and destination, identifying his employer, and confirming whether he was within the scope of his employment when the crash occurred. After learning that he was employed, we were able to collect an additional $575,000.00 from the employer’s commercial liability policy for Carol. Before they secured the advice of counsel, they were very close to signing a release limiting their payment to the initial/primary coverage. This release would have barred all additional claims. Thankfully, the hidden excess commercial policy paid over a half million dollars in additional benefits for Carol’s family.
The most common excess liability scenario is the borrowed vehicle accident. Liability insurance follows the vehicle in North Carolina. If a driver borrows a nonowned vehicle and causes an accident, the first source for payment of victims’ claims will be the vehicle owner’s policy. If the owner’s policy is insufficient to pay all losses, the driver’s personal auto policy provides secondary or “excess” liability insurance. This coverage is called excess because it pays only after all coverage for the primary policy (the policy covering the at-fault vehicle) is paid out and exhausted.
John borrows Andy’s car to run errands. John causes an accident after he disregards a stop sign and collides with Alice. The primary policy covering Andy and Andy’s car provides the state minimum mandatory liability coverage of $30,000.00 per person for bodily injury. John has his own car insurance with bodily injury liability coverage of $100,000.00 per person. The total liability insurance available to pay Alice’s injury claims is $130,000.00. If Alice’s injury claims are valued at $90,000.00, John’s primary policy pays the first $30,000.00. Andy’s personal auto policy provides excess liability coverage to pay the additional $60,000.00.
Another common excess liability scenario is the extra liability policy in the driver’s household. The accident victim should request the policy information for every “family member” (person related by blood or marriage who resided with the at-fault driver on the accident date) whenever the value of the injury claim exceeds the coverage limit available on the policy that covers the at-fault vehicle. If the at-fault driver has his or her own policy, this coverage would be second in line behind the vehicle policy to pay victim losses. If these two policies are not sufficient to cover all injury claims, family members’ auto liability policies will often provide additional, excess coverage to pay the victim’s claims. Be sure to look for all coverage to ensure that your claims are paid in full.
Beware of any partial settlements in excess liability cases! If multiple liability policies protect the at-fault driver, you must settle your claim with one single settlement against all liability carriers. If you sign a release to collect under just the primary policy, this release waives and stops all claims against any available excess coverage. Whenever you are facing a policy limits settlement offer that does not fully pay your claims, take the time to scrutinize the collision facts, vehicle ownership facts, and the driver’s employment and wealth before you accept the policy limits offer that leaves your losses only partially paid.