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Delivery Date: 26 Mar 2017
Location: Minnesota

how much liability insurance?

Fri Jan 18, 2019 12:58 pm

I have read in several places that the "rule of thumb" is that you need about as much driver's liability coverage as the sum of your assets. For example, if you own a $100k house "free and clear," and have $100k max-per-accident liability insurance, then that's OK. But if you own a $200k house, and you if you are at fault for a collision, then you might be sued for the value of your house. The "rule of thumb" would say to increase liability coverage to $200k. Similarly, if you had $400k of assets, you'd want $400k of liability coverage, because you might be sued for $400k.

One thing I don't understand is: the second example ($400k) implies that there are accidents with $400k settlements. If you owned the $200k house, and you were at fault in such a $400k accident, then wouldn't the other parties just sue your insurance provider for $200k, and then also sue you for the other $200k? How does having liability coverage in the same amount as the value of your assets magically protect them, if there are settlements which may be double the size of your assets?

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Posts: 480
Joined: Wed Jan 09, 2019 10:51 pm
Delivery Date: 10 May 2018
Leaf Number: 004270

Re: how much liability insurance?

Sat Jan 19, 2019 11:21 pm

I get the minimum.

I have been driving for about 20 years, only ever been hit by other idiots. My 2011 leaf I bought in 2018 is by far the newest vehicle I have ever owned.
Prior to the leaf my newest vehicle was 13 years old, all others before that, around 20.
So driving a newer vehicle doesn't make you safer if your a dumb arse.

If you are accident prone put big assets in an irrevocable trust.
I almost did a trust about 10 years ago when I was first starting my dealings with the BATFE.
2011 white SL leaf with 2014 batt.
Chargers: Panasonic brick moded for 240v, duosida 16a 240v and a 10kw setec portable CHAdeMO
Location: 88103

Posts: 3891
Joined: Sun Mar 06, 2011 2:28 am
Delivery Date: 13 Feb 2017
Location: Colorado

Re: how much liability insurance?

Sun Jan 20, 2019 6:33 am

From a lawyer's POV it makes "sense" to sue for the maximum they can hope to win.
That would be the insurance liability + vulnerable private assets.
You will have to read up on what is vulnerable -- it is a complicated topic.

From your POV, however, the calculation is more along these lines:
1. Try to keep damages below your liability
2. Try very hard to not be in a position where the insurance company pays out its responsibility and leaves you alone in court.

The thing is though, high limit liability is cheap if you have a good safety record; and if you do not then going under-uninsured is really stupid.
I pay ~ $20 a month for each of our two cars to hold a $1M liability policy. My insurance company has my back until the bitter end.
2013 LEAF 'S' Model with QC & rear-view camera
Bought off-lease Jan 2017 from N. California
Car is now enjoying an easy life in Colorado
03/2018: 58 Ahr, 28k miles
11/2018: 56.16 Ahr, 30k miles
2018 Tesla Model 3 LR, Delivered 6/2018

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Re: how much liability insurance?

Sun Jan 20, 2019 6:52 am

I have $500K plus a $1M umbrella policy as the latter is more cost effective and covers more. Only covering to match your assets is horrible advice. Thinking it is only necessary because someone will only hit you and that won't make you at fault, think again. I can tell you that not having at least $500K in liability is a fool's game today. . A simple accident can surpass that easily even when "It's not your fault since not every accident is straight forward especially when lawyers are involved. Liability is not that expensive incrementally. Anyone that thinks $1.5M is a large liability policy, believe me you are rolling the dice and it's not worth it, even if you have no accents unless you want to hide in cave for the rest of your life.

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