Generally, the insurance company is only on the hook for up to the policy limits. The policy is basically a contract with you saying "If you damage/injure someone, we'll pay the first $X of it for you." So in your case, the person you injured/damaged is only going to be able to collect up to $50k/100k from your insurance.
If their damages exceed those limits and you don't have any other insurance, they can try to go after you personally for more, but collecting on that can be a crapshoot. Even if they get a judgement against you for $1 million beyond the insurance limit, they may never see much of that unless you're wealthy (or later win the lottery). Garnishing your wages is potentially possible, depending on state law, but even then the amount allowed is generally small, typically a small percentage of your leftover takehome pay after your living expenses.
(Unfortunately, the same also applies to restitution in criminal cases. Many victims never recoup the amount of the damage/loss, unless it's fully covered by insurance, or they're one of the lucky ones to get help from a victim's fund through the government. Even if the guy responsible is ordered to pay you $$$ for the items he stole/destroyed, and even if a civil judgement is also entered against them, you're unlikely to see much - if any - of that money.)
Note that most/nearly all of these huge personal injury cases you see/hear about are against businesses, who either have much higher policy limits (and/or separate bigger umbrella policies), or who are self-insured. That's where the sharks smell the big dollars and go into a feeding frenzy, and what they're touting on those ads proclaiming "Joe Smuckatelli got me $5 million from my injury accident!" Someone getting run over by a Walmart truck means $$$$$. But someone getting run over by Farmer John's truck only means $.
Haven't been to Florida in a while, but around here the billboards are for injury attorneys. Their current focus seems to be injured by a trucking company which tends to mean bad injuries (e.g. 80,000 semi vs 5,000 lb SUV) and deeper pockets (e.g. in Texas a truck over 26,000 lbs must have $500,000 minimum liability but a SUV only has to have $30,000 per individual).
Ego is the anesthesia that deadens the pain of stupidity
DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer.
Posts: 23957 | Location: Northern Suburbs of Houston | Registered: November 14, 2005
My question is who pays the excess in a settlement me or the insurance company??
Theoretically, you would. The insurance company is only obligated to pay the limit you paid them for. In practice, it depends on essentially how much more money or assets you've got, and there are limits to even that. They can't take your house because it would leave you no place to live. They can't take your car because you have to get to work. If you're a tradesman, they can't take your tools. They can't touch Social Security (something that will shortly be relevant to me). I don't think they can do anything to retirement accounts like IRAs or 401k's, but don't quote me on that. That leaves them with possibly wage garnishment or any non-retirement account banked money. Chances are you don't have enough assets for ambulance chasers to bother with.
Posts: 29077 | Location: Johnson City, TN | Registered: April 28, 2012
Like with all insurance, location is a big factor. Florida has some of the most expensive insurance in the country (I believe they finally made it to #1 in 2023), so your umbrella quotes are almost certainly going to be higher than many other members, even from the same companies.
Joe Smuckatelli got me $5 million from my injury accident!" Someone getting run over by a Walmart truck means $$$$$.
^^^^^^^^^^^^^^ Sadly no. Walmart litigates everything and even if a truck cripples you you are SOL. This very thing happened to a close friend who now needs round the clock care. Walmart retained a top shelf lawyer and she was left in the cold. Locally they are famous for litigating a ten grand case and spending 20 grand to defend the suit.
Posts: 17706 | Location: Stuck at home | Registered: January 02, 2015
Originally posted by RogueJSK: Like with all insurance, location is a big factor. Florida has some of the most expensive insurance in the country (I believe they finally made it to #1 in 2023), so your umbrella quotes are almost certainly going to be higher than many other members, even from the same companies.
What you're insuring also matters. For me it's one truck, one motorcycle, and one house. Someone with 4 vehicles, a boat, a RV, and a house is going to be paying subtantially more for the same dollar figure umbrella policy.
My employer moves me every few years and I've had several agents tell me that a boat really ups the rate. Maybe they're just trying to make me feel better on my rate since I added the motorcycle...
Ego is the anesthesia that deadens the pain of stupidity
DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer.
Posts: 23957 | Location: Northern Suburbs of Houston | Registered: November 14, 2005
Unless you have no assets, you are woefully under insured. Property should easily be 100k. Price a new car and remember your repair/replacement is counted too. Your personal injury is even worse. I consider BI of 250/500 a minimum.
Make sure you also have complete under insured and uninsured coverage too. It should match your BI limits.
And you pay if there is an excess judgment unless you have a valid bad faith claim against your carrier. The exception would be if they agreed in writing to cover any judgment.
Someone sued me and my insurance company lawyer knew it was a shakedown. It was a bump during stop and go commute. They were suing well in excess of my coverage which wasn’t the minimum. The lawyer explained that part of the settlement agreement is that the other party will be satisfied with whatever the settlement amount is and I’ll be off the hook.
But to protect yourself in gross outliers, I would suggest an umbrella policy also which I have. Mine is something over $200 a year for a million coverage plus I have a required minimum qualifying coverage on my car.
"It did not really matter what we expected from life, but rather what life expected from us. We needed to stop asking about the meaning of life, and instead to think of ourselves as those who were being questioned by life – daily and hourly. Our answer must consist not in talk and meditation, but in right action and in right conduct. Life ultimately means taking the responsibility to find the right answer to its problems and to fulfill the tasks which it constantly sets for each individual." Viktor Frankl, Man's Search for Meaning, 1946.
Posts: 20263 | Location: The Free State of Arizona - Ditat Deus | Registered: March 24, 2011
Originally posted by Rey HRH: The lawyer explained that part of the settlement agreement is that the other party will be satisfied with whatever the settlement amount is and I’ll be off the hook.
Yes. Generally, in order to get a settlement from an insurance company, the claimant has to sign off, releasing the insured for whatever the settlement is.
Now, if one is insured for $5,000.00 and has $50,000,000.00 in assets the claimant is unlikely to accept the policy limits and go away.
My understanding is that if one has an accident, has $100,000.00 in insurance, the claimant declines to accept a policy limits settlement and goes to court, winning a $200,000.00 judgement, then the insurance company will pay the policy limit and the (under)insured will be on the hook for the balance.
Consider your assets and tailor your insurance accordingly.
Posts: 7221 | Location: Lost, but making time. | Registered: February 23, 2011
its said above but I'll emphasize it. You are incredibly under insured. You are on the hook. You need to get the situation improved asap. Probably the cheapest first step is getting the amount on your auto policy increased. And that's in both categories. But they will likely have a modest limit (maybe $1M). The next step is an umbrella policy (which has the benefit of covering all your underlying risks). It will however have a minimum coverage limit before it kicks in so you need to maintain those on the underlying policies. If you are this under insured on auto I would also take a serious look at your other risks and their policies (house, boat? etc. etc.)
“So in war, the way is to avoid what is strong, and strike at what is weak.”
I have 300/500 on the cars and then a personal umbrella for another $2mm. The insurance company generally make you buy the max liability on the cars/house and then you get to buy the umbrella. And it’s stacked policies.
Have an accident where they go to the hospital and watch the cash register just start adding up. I’m probly over insured/ paranoid but I have a decent net worth to worry about.
You are probably NOT over insured with a $2M umbrella if you have a decent net worth. Without some concept of your idea of decent I can't really say something constructive.
“So in war, the way is to avoid what is strong, and strike at what is weak.”
Lady two houses down had a 50/100 policy and accidentally turned left into a Corolla with 4 people. They suffered moderate to severe injuries.
Her carrier paid the policy limits and she was was on her own for the other $750k in claimed damages. She lost a judgment and a lien is now on her house. Almost all the equity she built up over the years is gone since interest attaches to the judgment. I think she's going to file bk.
Posts: 4332 | Location: "You can't just go to Walmart with a gift card and get a new brother." Janice Serrano | Registered: May 03, 2005
