Below is a story that is infamous in Texas oil & gas circles (at least the gray haired circles). My buddy testified in this and so did his coworker that I'm acquainted with so it's not an old wives tale. It's not auto insurance, but this homeowner's insurance example paints a good picture of being underinsured.

The week before Texas' One Call regulations became a legal requirement, a married couple hired an unlicensed, uninsured contractor to use an excavator to clean out the edge of their pond. The whole area used to be hundreds of acres of cow pasture, but now it's a newer neighborhood full of homes on 1 to 3 acre lots. The contractor opted not call 811 prior to digging since it was optional for another week. The contractor needed a place to bury the pond debris so they decided to dig a pit adjacent to the pond. In preparation for digging the pit, the backhoe operator proceeds to lower one of the stabilizer feet and tip over a bright yellow sign that read "danger high pressure pipeline. call {pipeline company name} at {pipeline company phone number}." A few minutes later there is a geyser of crude oil spraying hundreds of feet in the air then landing on homeowner's home/property and multiple neighbors' homes/properties. The contractor's entire net worth was a very old dump truck, a very old trailer, and the very old rubber tired excavator. The pipeline company won the lawsuit for both direct damages (e.g. value of crude oil and cost to repair the high pressure crude oil pipeline) and downtime (i.e. time the pipeline not operating due to the negligence) and the award exceeded both the homeowner's insurance policy and the value of the contractor's assets which left the married couple (i.e. homeowners) responsible for the remainder. The neighbor's also sued the married couple (i.e. homeowners) and won. The home was sold but it's unclear whether it was the result of the lawsuit judgements, their divorce, or all of the above.

Good insurance considerations:

For both homeowners and auto - do you have enough insurance to protect your assets in the event of an accident caused by you?

For both homeowners and auto - is your marriage strong enough to survive an accident above your insurance policy limits?

For homeowner's insurance - only hire licensed, insured contractors to do work at your property. You want their policy large enough to cover your property, your neighbors' property, utilities, etc. They also need workman's comp insurance as you don't want an injury to their employee falling back on your homeowner's policy.

For homeowner's insurance - if the contractor is excavating at your property, look for flags for all utilities you know about, and if one or more utility is missing ask for the 1-call ticket number and call to verify whether or not it's been "cleared". If the 1-call ticket isn't clear don't let them proceed with work until it's cleared.

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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.

I guess there are advantages to being poor .
Nothing to take from me . We are both in our 60's . Go ahead and put a lien on my house . Can't garnish my wages . Pension , 401k ,and SSI ...not on the radar .

quote:

Today I looked at my auto policy and I see I have 50G /property, and 100G personal injury coverage (per incident).

Hopefully you looked at your umbrella policy next and saw limit there of $1MM or more. However given what you said I doubt it as most of those require 100/300 limits on auto.

Get thee to your agent and add this on. Won't be that much more, and avoids you bankrupting yourself. Well reduces the chance at least.

Personally, I'd rather enrich some insurance agency for a few more years than see the significant value of my home go to a claimant instead of my kids. Hell if I didn't have kids, I'd feel the same way about the cat charity or whatever.

Asset protection should be considered to prevent property from being seized. Higher liability amounts allow lawyers to go for winning lotto type awards. Insurance agents like to sell insurance.

Typically, if the damages or injuries exceed your policy limits, you might be responsible for paying the excess.

quote:

Originally posted by selogic:
I guess there are advantages to being poor .

Similar situation here. Live in rented apartment, 15-year-old car, still working but shortly to go on SS, $30K in mechanic's tools that might go for $2500 at a garage sale. I do have a few grand in savings accounts, but that is the extent of my assets.

100/300/50 used to be considered "full coverage". These days I would recommend 250/500/100 to feel covered. We also have an umbrella policy, because they're relatively cheap.

quote:

Originally posted by Flashlightboy:
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.

In many states, your primary residence is exempt from judgement liens.

I'm a Florida Lawyer, did Criminal Prosecution till I retired 16.5 years ago. Then some civil cases, wills, criminal defense, some Federal matters, some Pro Bono stuff and now I'm fully retired, though I kept my law license, "just in case."

I have seen some horrible civil outcomes (none of which I was at all involved in) and it scared me enough about my own financial well-being that I talk to my insurance agent once a year, and I check with him to make sure I still have the best insurance plan including an umbrella policy I can obtain from him. I also have a "name-brand" company-State Farm. I pay a bit more, I believe, to have them, but I know they won't close up shop anytime soon. Or, at least, I hope not.

They did close up a number of years ago and take their hurricane insurance out of state. My old office room-mate, Charlie Crist, said something like "Good riddance!" when they left but it was a bit scary finding that other company. Fortunately, I found another for that type of insurance and it's been okay since.

Since then I sold my boat and my house on the water and moved to the highest point in our county (our city ranges from 7 to 36 feet above sea level, they tell us, I never personally measured it).

Hurricanes and car crashes are simply not something to take for granted from a safety and financial perspective and you, the OP, are very, IMO, under-insured.

Bob

quote:

Originally posted by smlsig:
Look into getting an umbrella policy.

Usually you’ll have to have a certain minimum coverage and then the umbrella policy will kick in.

I have a 2 mil policy and I think it’s about $450/yr.

smlsig is ABSOLUTELY CORRECT!!!

Umbrella insurance is relatively inexpensive, especially related to your actual net worth.
I strongly suggest you evaluate your net worth; include everything of value you own, especially
Your home and any other real property, jewelry, firearms, autos etc. You might
Be surprised when all is added up.

Plainiff attorneys will,go after every asset you have, so protect it.

I had to chastise my plumber - although a one-man shop, he has acquired real estate now worth over a million dollars
He has understood his exposure and now carries a $2MM Umbrella!

Just do it!!

quote:

Originally posted by V-Tail:

quote:

Originally posted by smlsig:

Look into getting an umbrella policy.

Usually you’ll have to have a certain minimum coverage and then the umbrella policy will kick in.

I have a 2 mil policy and I think it’s about $450/yr.

I'm considering an umbrella policy and the premium quotes that I'm getting are considerably higher than that.

If you don't mind, will you tell me which carrier you're with? If you don't want to say in public, my email address is in my profile.

Vtail all our insurance policies are with Erie.

quote:

Originally posted by Milliron:
100/300/50 used to be considered "full coverage". These days I would recommend 250/500/100 to feel covered. We also have an umbrella policy, because they're relatively cheap.

Same. I have 250/500/250, with an additional 1M umbrella.

I just double-checked, and my $1 million umbrella policy is a mere $113/year. That's less than $10 per month for a whole lot of additional coverage and peace of mind.

Then my 250/500/250 comprehensive coverage is around $120/month. So just $130/month total for 250/500/250+1M. (Plus the umbrella applies to home too.)

Even with also having to bump your car coverage from 50/100 to 100/300 or 250/500 to meet your insurance company's minimum for umbrella coverage, that increase will typically be small as well. For example, if I were to drop down from the current 250/500/250+1M to 50/100/50 with no umbrella, I might save $20 or $30 per month. So spending that few dollars more per month to go from just 50/100 to a much more robust 250/500+1M is a no-brainer in today's world.

Obviously, exact cost will vary from state to state, and person to person based on stuff like your claims history and what specifically you have covered. But regardless, the cost is small compared to the benefit.