Legal help from insurance company

[gerard2006]

Jurisdiction

New York

Folks - Can anybody comment if this statement below makes sense? The thread was mostly based on coverage amounts i.e. whether one should take 100/300 which most people deem as sufficient or move to 250/500k + potentially umbrella policy.

Remember this: the insurance company is putting up $250/$500k dollars on you. They don't want to lose that money, so they will fight whatever fault or liability on you needed to defend it. However, if you had say $50k limits they might just write a check for $50k and they are done, but that won't stop anyone coming after you for anything beyond that.

If you care, the whole thread is here - Reddit - Dive into anything

 

[Tax Counsel]

When it comes to auto insurance and liability for injury accidents, the first thing the insurance company is going to do is look if its insured is obviously at fault for the accident. If the insured was clearly was liable and the damages will be more than your policy limits, the insurance company will just a cut a check to the injured persons for the policy limits and it is out of the picture. You can still end up being sued for whatever damages the insurance company didn't pay.

Now if the circumstances are different the insurance company's response will be different. The bottom line is that the insurance company will look to pay as little as possible for the accident while still meeting its contractual obligation to its insured. That includes looking at the costs of litigation. If the case is clearly a loser, the insurance company isn't going to pay out lots of money in legal fees to defend the case.

 

[Redemptionman]

Depends upon the insurance company, and your assets. Basically, if your assets are more than the min coverage you carry then you should carry limits that would cover your assets so you do not put them at risk. If on the other hand, you have little to no assets regardless if you have a 70k vehicle then even if you carry state mins then that is all they will pay out. So, basically your insurance should be enough to cover your assets. It is all adversarial in nature unless you are hit by a driver who carries enough insurance and they have clear liability.

Hope this clears it up.

 

[zddoodah]

The amount of insurance any given person should carry depends primarily on the extent of one's assets.

Also note that, regardless of policy limits, an auto liability insurer owes a duty to its insured to prevent exposure in excess of policy limits, if at all possible.

 

[Redemptionman]

The amount of insurance any given person should carry depends primarily on the extent of one's assets.

Also note that, regardless of policy limits, an auto liability insurer owes a duty to its insured to prevent exposure in excess of policy limits, if at all possible.

Which brings up a troubling situation, such as UIM/ UM coverage which should kick in when you use up the policy limits of the at fault driver but do not because the UIM/ UM carrier does not want to pay out for money they will never see back.

 

[Zigner]

Which brings up a troubling situation, such as UIM/ UM coverage which should kick in when you use up the policy limits of the at fault driver but do not because the UIM/ UM carrier does not want to pay out for money they will never see back.

It doesn't necessarily just "kick in". A claim must be made.

 

[Tax Counsel]

While assets certainly are consideration, if you have say $50k in non exempt assets and a $50k liability coverage, you could still lose all your non exempt assets if the judgment is $100,000 or more. Furthermore, the judgment lien holder could garnish wages and other income with the judgment left over after the insurance company pays the limit. That's why it makes sense to cover the damages you might reasonably expect from a fairly serious accident if you are interested in keeping your assets and avoiding problems like garnishment, etc. Bankruptcy would help with that to some extent, but again you'll lose your non exempt assets in a Chapter 7 bankruptcy. Viewed that way, a $50k policy still exposes you to significant risk of loss of assets and/or income should you get into a fairly serious accident. So run the numbers of what higher insurance limits will cost. Often it's not a whole lot greater to get a $300k liability coverage over $50k and that $300k will cover the vast majority of claims you might expect in most accidents. So consider how much more risk you are willing to take to get some extra savings on your insurance premium.

 

[adjusterjack]

Remember this: the insurance company is putting up $250/$500k dollars on you.

No, it's not. In fact, the insurance company is putting no dollars on you until somebody makes a claim against you. Even then, the amount (called a "reserve") depends on the estimated potential value of the claim.

For example, if you run over a surgeon's hands, yes, the reserve is likely to be the per person limit of $250,000. But if it's a soft tissue injury like whiplash, with little or no immediate medical treatment, the reserve might be as little as $10,000 (adjusted, of course, as additional information comes in).

However, if you had say $50k limits they might just write a check for $50k and they are done, but that won't stop anyone coming after you for anything beyond that.

Yes, that could happen.

If you care, the whole thread is here - Reddit - Dive into anything

I read it (reddit?). So much ignorance about insurance among the insurance consumer. Sigh.

Which brings up a troubling situation, such as UIM/ UM coverage which should kick in when you use up the policy limits of the at fault driver but do not because the UIM/ UM carrier does not want to pay out for money they will never see back.

You should take out your own car insurance policy and read the sections on UIM/UM. You will find that they are, by design, adversarial coverages because you have to prove your claim just as you have to prove it against the other driver.

 

[army judge]

I read it (reddit?). So much ignorance about insurance among the insurance consumer. Sigh.

 

[gerard2006]

Learning a lot here, far higher quality of posts than you can find on other boards. I really appreciate the time you folks took to write your posts

1) I never thought of insurance in this manner i.e. from above statement "The amount of insurance any given person should carry depends primarily on the extent of one's assets.". Instead, I simply carried what 90% of people did which is 100/300k for bodily injury liability & supplemental uninsured thinking if it goes a few hundred k beyond that, I will self-insure and dip into my savings and save on some premium. However, it occurs to me now that there is no way to pin down whether a settlement would be 700k or double of that and my liquid savings won't cover that

2) At the same time, I don't want to be caught up in fear and over-insure my entire life. If you are saying I should match my assets, I would have to max out my car insurance to 250/500 + get umbrella insurance. At what stage do you draw a line? Would you advise someone with 5m in assets purchase a 5m umbrella insurance policy which is about $1800 annually in our area?

3) It seems NYC homestead exemption is $179,950 for married couples - is that accurate and I guess that means we get to keep that amount in a lawsuit

4) I'm assuming homeowners insurance doesn't complement or is any use for accidents/medical costs outside one's home in an automobile right?

Thanks

 

[Redemptionman]

Learning a lot here, far higher quality of posts than you can find on other boards. I really appreciate the time you folks took to write your posts

1) I never thought of insurance in this manner i.e. from above statement "The amount of insurance any given person should carry depends primarily on the extent of one's assets.". Instead, I simply carried what 90% of people did which is 100/300k for bodily injury liability & supplemental uninsured thinking if it goes a few hundred k beyond that, I will self-insure and dip into my savings and save on some premium. However, it occurs to me now that there is no way to pin down whether a settlement would be 700k or double of that and my liquid savings won't cover that

2) At the same time, I don't want to be caught up in fear and over-insure my entire life. If you are saying I should match my assets, I would have to max out my car insurance to 250/500 + get umbrella insurance. At what stage do you draw a line? Would you advise someone with 5m in assets purchase a 5m umbrella insurance policy which is about $1800 annually in our area?

3) It seems NYC homestead exemption is $179,950 for married couples - is that accurate and I guess that means we get to keep that amount in a lawsuit

4) I'm assuming homeowners insurance doesn't complement or is any use for accidents/medical costs outside one's home in an automobile right?

Thanks

uh yeah 90% of the people do not carry 100k plus liability limits, it is more like 5-8 percent carry that much and even fewer have anything above 100k. If you have assets that can be seized in a personal liability case then a smart lawyer will uncover them and more than likely put liens on them. However, very few cases these days tend to go over policy limits as that is all there is in the case. Unless you just careless and without want lay into someone, you rarely will face a huge verdict unless you kill or permanently injure that person. If you have assets over 5m then you could have assets over 100m then buy your own bond and self insure. Some states such as California allow you to do that. Lots of companies these days self insure which is smart if you have enough to do that and cover everything that could possibly happen.

Unfortunately most people do not, and that doesn't take into effect the amount of people who just carry state min limits to get by and go out and get 50-80k vehicles. Yes that happens all the time, more than you think.These people know that their insurance regardless of limits has a duty to defend the excess judgement. This duty sees that their client is not held responsible for damages beyond the limits of their own policy. Only you know what you should carry and if it is enough. You can bet your stars that if you have a wreck and injury someone enough to where they find a contingency lawyer then sue you they will run an asset check on you as the defendant and them as the plaintiff. They all do.

 

[adjusterjack]

At what stage do you draw a line?

You'[re right. You have to draw a balance between what you are comfortable spending on insurance and what risk you are willing to take with regards to a potentially catastrophic claim against you.

Would you advise someone with 5m in assets purchase a 5m umbrella insurance policy which is about $1800 annually in our area?

The person with 5 million in assets has most assuredly already bought that 5 million dollar umbrella and has no problem paying for it.

I'm assuming homeowners insurance doesn't complement or is any use for accidents/medical costs outside one's home in an automobile right?

Correct.

It seems NYC homestead exemption is $179,950 for married couples - is that accurate and I guess that means we get to keep that amount in a lawsuit

It's $150,000 in NYC. See CPLR 5206:

New York Civil Practice Law and Rules Law § 5206 (2022) - Real Property Exempt From Application to the Satisfaction of Money Judgments. :: 2022 New York Laws :: US Codes and Statutes :: US Law :: Justia

However, in 2021 a bill was proposed increasing that to $250,000:

NY State Senate Bill S5040 (nysenate.gov)

Contact your Senator to see what the status is.

 

[Tax Counsel]

These people know that their insurance regardless of limits has a duty to defend the excess judgement.

Those people should not take a whole lot of comfort from that. For example, if the customer is clearly at fault and damages will exceed the policy limits, the insurance company isn't going to pay a lawyer to fight a losing battle. The insurance lawyer will do what he or she can do to try to get as low a settlement as possible. But if the customer does't accept what the insurance company is able to negotiate and the customer says no, the insurance company doesn't have to pay to go on litigating the case. As I said before, it can just write a check for the policy limits at that point and let the customer defend for the rest.

This duty sees that their client is not held responsible for damages beyond the limits of their own policy.

Sure, if the customer has few non exempt assets for the injured party to get, the lawyer will seek and often get a settlement for the policy limit even though actual damages are higher because everyone knows that's realistically all the injured party can expect to collect. It's when the customer does have significant non exempt assets that it's unlikely to get a settlement for only the policy limits. The insurance company is not under a duty to do the impossible. It needs only to make its best efforts to protect the customer. If the customer is no on board with what the insurance company lawyer negotiates, then the customer is on his/her own after that.

 

[Redemptionman]

Those people should not take a whole lot of comfort from that. For example, if the customer is clearly at fault and damages will exceed the policy limits, the insurance company isn't going to pay a lawyer to fight a losing battle. The insurance lawyer will do what he or she can do to try to get as low a settlement as possible. But if the customer does't accept what the insurance company is able to negotiate and the customer says no, the insurance company doesn't have to pay to go on litigating the case. As I said before, it can just write a check for the policy limits at that point and let the customer defend for the rest.

Don't go down that rabbit hole, the only thing not able to be cleared from a bankruptcy is willful wanton conduct which unless the defendant is a criminal drunk driver is very hard to prove. Tort reform and personal recovery limits will continue to expand from various states and companies will continue to profit off of it while continuing to raise rates. You will probably find the duty to indemnify greater than the state min limits the driver has. You add limits that protect yourselves, your loved ones, and your property. Unless you have taken on a large insurance company then you have no idea what kind of fight and cavalier attitude of the people with whom you are fighting against. They can wait and sometimes the victim of these events can not.

 

[Tax Counsel]

Unless you have taken on a large insurance company then you have no idea what kind of fight and cavalier attitude of the people with whom you are fighting against. They can wait and sometimes the victim of these events can not.

I am of counsel to one of the best tort litgation firms in my state. The bulk of what we do is personal injury work -- that's what most of the lawyers work on full time. I've seen many tort cases and have dealt with a lot of insurance companies. I know full well how they deal with claimants who have extensive injuries that the insurance company doesn't want to pay for. And that experience is why I said what I did in my posts here. If you are expecting your insurance company to go above and beyond their absolute minimum obligation, you are taking false comfort in the protection you'll get when you make a claim. They aren't going to make a big fight over a case that they know they cannot win. That's just throwing good money after bad. They will put up a fight if they think that will save them money. And yes, stalling the payment out as long as possible is certainly one of the tricks up their sleeve to try to pressure the claimant into taking a lower payout.

 

[gerard2006]

Looks like I'm able to switch to higher 300/500k limits for both BIL and UM for $200 more every 6 months which isn't bad. In fact, if I move my $100 deductible for collision & comprehensive to $2500, it cancels out the increase which I may do as $2500 is a small amount I can easily pay for. Past doesn't dictate the future but I've been free of any collision claims for 20 years but in numbers, if I have one claim every 6 yrs, it evens out. In the past I've had comprehensive claims almost every 18 months but most are below $1000 that I paid out of pocket for to avoid insurance premiums going up

One side question - I guess it's worthwhile getting the Supplemental Spousal Liability Insurance which is another option in NY that allows you to file a claim even if spouse was driving

Thnaks

 

[adjusterjack]

One side question - I guess it's worthwhile getting the Supplemental Spousal Liability Insurance which is another option in NY that allows you to file a claim even if spouse was driving

That coverage is available in NY because NY auto policies have the following liability exclusion:

"For "bodily injury" sustained by the spouse of any "insured". This Exclusion 9. does not apply if: A. "You" have purchased Supplemental Spousal Liability Coverage from "us";"

I collect sample policies from many states and, while I don't have samples from every state, so far I have not come across that exclusion anywhere but in a NY auto policy.

 

[gerard2006]

Ok given the amount of time I spend with my spouse where either she or I are driving, don't you think it makes sense to include this coverage in our policy?

 

[adjusterjack]

That has to be your decision.

Understand that it's an adversarial coverage. The injured passenger spouse would have to prove that the driver spouse was negligent and that the amount of damages claimed was valid, just like making a claim against somebody else. The claim might also require the injured passenger spouse to sue the driver spouse which would put the injured passenger spouse in the position of having to testify against the driver spouse. That could be problematic if the driver spouse is facing claims and/or lawsuits by others.

Personal Injury Protection, OTOH, pays without regards to fault but does not pay pain and suffering.

You can, of course, buy both coverages to the extent that your budget allows.

 

[gerard2006]

So if I choose to decline spousal coverage on my auto policy, I guess my Umbrella coverage would help with PIP correct in an accident?

Also, to qualify for Umbrella insurance with many providers, many require 300/300k on bodily injury liability on the auto policy but no such minimum covergae reqirement for Uninsured Motorist. However, most brokers seem to advise matching BIL & UIM. Is that really required if I plan to get an Umbrella policy with an Uninsured Motorist add-on?

Thanks