Is Your Liability Insurance Enough?
Liability insurance is important, but liability insurance can’t replace
the other ways to protect yourself. Liability insurance insures only one
in three lawsuits, so most lawsuits aren’t even covered. The possibilities
of an uninsured claim are endless. How good is your million-dollar liability
policy if you’re sued for two million? And with today’s unpredictable,
ludicrous jury awards, who can be certain they won’t be hit with
an excessive judgment? You will have to hire your own lawyer to defend
yourself against your potential excess liability and even then you could
still lose your assets to policy exclusions or loopholes.
A good plaintiff’s lawyer can manipulate a jury to make an outlandish
award far beyond your policy limits. Common lawsuits include breach of
contract, a defaulted loan, family disputes, and many others.
The truth is you just can’t predict what you can lose once you are
sued. Years ago, we could predict with reasonable accuracy the outcome
of a lawsuit. Juries were sane. Judges cut excessive awards. Punitive
damage claims that awarded a plaintiff millions of dollars for no damages
were unheard of. But that was when courts compensated actual losses. Today’s
reality is very different. Courtrooms now redistribute wealth, so you
can’t be confident that your million-dollar policy is
enough. No matter how much liability insurance you carry, some litigant will sue
you for more.
So how much liability insurance is enough? That’s a tough question
to answer. If insurance were free, we would say to buy as much as you
can. But insurance isn’t free, and often the more you buy the more
you pay. You must find a balance with the cost of increased coverage against
the risks from less coverage. You must not only consider the probability
of an excess judgment against you but also what you could lose if you
did face a judgment beyond your policy limits.
Since you can never buy enough coverage to insulate yourself against today’s
insatiable litigation demands, your best solution is to also protect yourself
by means other than insurance which is why Asset Protection makes a great