Insurance- "Under Insured"

[Alps79]

For the second time in three weeks I was rear ended. Both times, I was stopped in traffic, car behind me stopped, third car did not and caused a three car pileup. The first time was pretty minor; ~$1500 damages to my car; her insurance put me in a rental, and 10 days later all was fine. I was out zero $ OOP. It's not going to be as smooth this time around. Apparently the person at fault is "under insured." His policy pays up to $25K. Well, the car he hit is a brand new 2019 Toyota and it was totaled; valued around $28K I think. My car's estimate is $4500. 

I have filed a claim with my insurance and they are waiting to see if he's actually under insured.  I have some questions- what does this mean for this guy? We he be responsible for paying all the damages out of pocket, after the $25K? What if he cannot afford it? 

Also- for your car insurance, not sure if this is the right word- but what limit does your policy have on damages? Dh and I looked at ours; we have $50K but I'm thinking we should up it. We are meeting with our agent this week to go over both auto and home insurance to ensure we are properly insured. Any other insurance recommendations or things we should ask our agent? Thanks!

[zaneyzoo]

It means his policy will pay up to the $25,000 limit and he can be liable for the rest above that.


We carry $250,000/$500,000/$250,000 with a $1million umbrella

I work in the industry and see claims happen all the time. any more $50,000 or $100,000 isn't enough - settlements can happen where future earnings can be taken.


And most of the time, liability isn't where you want to save money when it comes to insurance.

[Alps79]

Aug 26, 2019 13:37:53 GMT -5 zaneyzoo said:

It means his policy will pay up to the $25,000 limit and he can be liable for the rest above that.


We carry $250,000/$500,000/$250,000 with a $1million umbrella

I work in the industry and see claims happen all the time. any more $50,000 or $100,000 isn't enough - settlements can happen where future earnings can be taken.


And most of the time, liability isn't where you want to save money when it comes to insurance.

Thank you! Regarding our policy, dh was throwing out numbers. There was a $50K, a $100K, and a $300K but I don't remember specifics. He led me to believe that in this instance, had I been at fault, our policy would pay up to $50K in damages (excluding medical, I think that was $300K)... which yea, I don't think is high enough and am really glad we're reevaluating all of this. It is important to me to be well insured so I appreciate your insight! 

ETA- you say he can be held liable. How does that work? My insurance covers me, right? And then they could/would go after him? Will he be forced to pay all damages? 

[zaneyzoo]

people may carry lower property damage limits. I would guess your policy would pay $100,000 per person injured/$300,000 for all people injured and then $50,000 for property damage (so for the other vehicle)

The rules of thumb we use is you want your liability limits to be at or above your net worth.

There was a claim recently where someone had rear ended a vehicle that had a child in it. It was determined the child will have life long neck issues and was awarded 1.9million. Now, that doesn't happen every day, but it does happen too often.

We live a very sue-happy and distracted world. Ultimately, you need to be comfortable with your limits.

[zaneyzoo]

Aug 26, 2019 13:43:33 GMT -5 Alps79 said:

Aug 26, 2019 13:37:53 GMT -5 zaneyzoo said:

It means his policy will pay up to the $25,000 limit and he can be liable for the rest above that.


We carry $250,000/$500,000/$250,000 with a $1million umbrella

I work in the industry and see claims happen all the time. any more $50,000 or $100,000 isn't enough - settlements can happen where future earnings can be taken.


And most of the time, liability isn't where you want to save money when it comes to insurance.

Thank you! Regarding our policy, dh was throwing out numbers. There was a $50K, a $100K, and a $300K but I don't remember specifics. He led me to believe that in this instance, had I been at fault, our policy would pay up to $50K in damages (excluding medical, I think that was $300K)... which yea, I don't think is high enough and am really glad we're reevaluating all of this. It is important to me to be well insured so I appreciate your insight! 

ETA- you say he can be held liable. How does that work? My insurance covers me, right? And then they could/would go after him? Will he be forced to pay all damages? 

Regarding how the claim would be handled - if his company isn't going to pay the value of the car, I would discuss with your agent about filing through your insurance company and letting them subrogate.  Companies handle subrogation differently, so I would ask if there is any impact on you while it is being subrogated.

[woodgnome]

This exact same scenario happened to me years ago, only I was the car in the middle. The first car sued me and the car who hit me and bumped me into the first car & that was the point at which we got a $1M umbrella policy because we saw how little our car insurance would cover. Our insurance company requires the highest level of auto coverage in order to carry an umbrella policy so we have plenty of coverage now. I was dismissed from the lawsuit but it was successful against the one who hit me for whiplash.

[definitelyO]

you should check your policy and see if you have uninsured motorist coverage. if the person that hit you doesn't have enough coverage then your policy may trigger for un/under insured coverage. the other way would be that you would file in the court for restitution. Then the at-fault driver could have an order placed that he would owe you out of pocket. BUT, only if he has it... otherwise you get into garnishments, etc...


We carry $500,000 policy limits plus a $1M umbrella.

[Alps79]

Aug 26, 2019 14:27:20 GMT -5 definitelyO said:

you should check your policy and see if you have uninsured motorist coverage. if the person that hit you doesn't have enough coverage then your policy may trigger for un/under insured coverage. the other way would be that you would file in the court for restitution. Then the at-fault driver could have an order placed that he would owe you out of pocket. BUT, only if he has it... otherwise you get into garnishments, etc...


We carry $500,000 policy limits plus a $1M umbrella.

Thankfully I do! I think I have both un & under insured... though maybe it's the same thing? So I should be good and covered, I HOPE!

woodgnome, Oh wow, that sounds like a nightmare!! So glad that's behind you. 

[zaneyzoo]

Aug 26, 2019 14:27:20 GMT -5 definitelyO said:

you should check your policy and see if you have uninsured motorist coverage. if the person that hit you doesn't have enough coverage then your policy may trigger for un/under insured coverage. the other way would be that you would file in the court for restitution. Then the at-fault driver could have an order placed that he would owe you out of pocket. BUT, only if he has it... otherwise you get into garnishments, etc...


We carry $500,000 policy limits plus a $1M umbrella.

typically underinsured/uninsured only covers medical and not property damage.  It may vary state to state though.  

[keegmiles]

Aug 26, 2019 14:35:54 GMT -5 Alps79 said:

Aug 26, 2019 14:27:20 GMT -5 definitelyO said:

you should check your policy and see if you have uninsured motorist coverage. if the person that hit you doesn't have enough coverage then your policy may trigger for un/under insured coverage. the other way would be that you would file in the court for restitution. Then the at-fault driver could have an order placed that he would owe you out of pocket. BUT, only if he has it... otherwise you get into garnishments, etc...


We carry $500,000 policy limits plus a $1M umbrella.

Thankfully I do! I think I have both un & under insured... though maybe it's the same thing? So I should be good and covered, I HOPE!

So depending on your state laws, underinsured motorist may only cover your bodily injury. The un/underinsured motorist coverages in my state cover bodily injury and property damage separately. Uninsured property damage for is only uninsured drivers, not underinsured drivers. You would still have coverage under your auto insurance (typically unless you are in a no fault state) subject to your deductible. Your insurance would then subrogate to recover their monetary losses as well as your deductible.

Again this is going to vary state by state.

[lacey]

This happened to me several years ago. I believe I had to pay my deductible up front. My insurance went after the third driver and basically I got a portion of my deductible back that was proportionate to the amount of damage of my car vs the middle car. I didn't go after the 3rd driver because it seemed like too much effort for the amount I was out ($500 deductible and I think I got about half back). It was, however, a rude wake up for awareness of under insured drivers for me.

[Alps79]

Aug 26, 2019 14:41:24 GMT -5 lacey said:

This happened to me several years ago. I believe I had to pay my deductible up front. My insurance went after the third driver and basically I got a portion of my deductible back that was proportionate to the amount of damage of my car vs the middle car. I didn't go after the 3rd driver because it seemed like too much effort for the amount I was out ($500 deductible and I think I got about half back). It was, however, a rude wake up for awareness of under insured drivers for me.

This sounds like what will happen to me. It sounds like my insurance does cover property damage bc the agent definitely said something about getting half my deductible back. (mine is also $500 so I would get $250 back.) 
Oh wait, yes for sure, if fact they have already mailed me a check to cover damages, minus my $500 deductible. 

[twilightmv]

This is very common and why you need an agent to protect your assets. The Geicos and Progressives of the world will happily sell the lowest limits. When you are talking medical bills these days, $25K gets eaten up in the blink of an eye.

[whattheheck]

Aug 26, 2019 13:37:53 GMT -5 zaneyzoo said:

It means his policy will pay up to the $25,000 limit and he can be liable for the rest above that.


We carry $250,000/$500,000/$250,000 with a $1million umbrella

I work in the industry and see claims happen all the time. any more $50,000 or $100,000 isn't enough - settlements can happen where future earnings can be taken.


And most of the time, liability isn't where you want to save money when it comes to insurance.

These are my limits plus I have supplemental uninsured/underinsured coverage.

[Deleted]

I just wanted to say, that thanks to this post, I just reviewed my auto coverage limits and reached out to my agent about increasing them and adding an umbrella policy. I've been in a few accidents, and even when I totaled my car, we were completely covered, but I know that we were close, and honestly, don't have the liquid assests to cover any overages should they occur.

[Alps79]

Aug 28, 2019 7:10:18 GMT -5 @sameoldstory said:

I just wanted to say, that thanks to this post, I just reviewed my auto coverage limits and reached out to my agent about increasing them and adding an umbrella policy. I've been in a few accidents, and even when I totaled my car, we were completely covered, but I know that we were close, and honestly, don't have the liquid assests to cover any overages should they occur.

Meeting with my agent in abt an hour! Also strongly considering a 1 mil umbrella policy (though I don’t fully understand what it is, but hopefully will soon!!)

[Deleted]

Aug 28, 2019 10:23:27 GMT -5 Alps79 said:

Aug 28, 2019 7:10:18 GMT -5 @sameoldstory said:

I just wanted to say, that thanks to this post, I just reviewed my auto coverage limits and reached out to my agent about increasing them and adding an umbrella policy. I've been in a few accidents, and even when I totaled my car, we were completely covered, but I know that we were close, and honestly, don't have the liquid assests to cover any overages should they occur.

Meeting with my agent in abt an hour! Also strongly considering a 1 mil umbrella policy (though I don’t fully understand what it is, but hopefully will soon!!)

My agent recommended increasing to at least 100/300/100 for the auto but I decided to go to 250/500/100 since it will only be $22 more per month. I also decreased my deductible from $1k to $500.  I had him review my homeowners and he said that I have adequate coverage there which is goo. When I asked about an Umbrella policy, he said that he only recommends them for people with over $500k in assests, which I don't have, so we're not going to do that right now. If I do decide to do it in the future, I'll need to carry 250/500/100 in auto, so at least I'll have that if/when the time comes. 

[zaneyzoo]

Aug 28, 2019 10:28:55 GMT -5 @sameoldstory said:

Aug 28, 2019 10:23:27 GMT -5 Alps79 said:

Meeting with my agent in abt an hour! Also strongly considering a 1 mil umbrella policy (though I don’t fully understand what it is, but hopefully will soon!!)

My agent recommended increasing to at least 100/300/100 for the auto but I decided to go to 250/500/100 since it will only be $22 more per month. I also decreased my deductible from $1k to $500.  I had him review my homeowners and he said that I have adequate coverage there which is goo. When I asked about an Umbrella policy, he said that he only recommends them for people with over $500k in assests, which I don't have, so we're not going to do that right now. If I do decide to do it in the future, I'll need to carry 250/500/100 in auto, so at least I'll have that if/when the time comes. 

I wonder why he said that.  Big accidents and settlements don't happen just to people with >$500k in assets.  Future earnings can be taken if a settlement were to happen.  Not to scare you - it's just an interesting line of thought.

Again, you need to be comfortable with your limits.  I am glad the OP prompted you to check it out!   

[msmerymac]

Aug 26, 2019 13:37:53 GMT -5 zaneyzoo said:

It means his policy will pay up to the $25,000 limit and he can be liable for the rest above that.


We carry $250,000/$500,000/$250,000 with a $1million umbrella

I work in the industry and see claims happen all the time. any more $50,000 or $100,000 isn't enough - settlements can happen where future earnings can be taken.


And most of the time, liability isn't where you want to save money when it comes to insurance.

We do too. We used to have 100k/300k/100k, but the umbrella policy requires you to max out the car insurance before it will kick in. 

We had the 100/300/100 because my husband's income has always been high enough that it seemed like a good balance - the lowest amount and he would LIKELY get sued when they found out he made more than 50k/year. Does that matter at all?

[Alps79]

Aug 28, 2019 10:23:27 GMT -5 Alps79 said:

Aug 28, 2019 7:10:18 GMT -5 @sameoldstory said:

I just wanted to say, that thanks to this post, I just reviewed my auto coverage limits and reached out to my agent about increasing them and adding an umbrella policy. I've been in a few accidents, and even when I totaled my car, we were completely covered, but I know that we were close, and honestly, don't have the liquid assests to cover any overages should they occur.

Meeting with my agent in abt an hour! Also strongly considering a 1 mil umbrella policy (though I don’t fully understand what it is, but hopefully will soon!!)

Quoting myself- great meeting. Upped some things, brought some things down. Went w a 2m umbrella policy which should cover us well. I feel so much better going over all of this. We’ll revamp homeowners in Nov as we renew in Jan and I guess new endorsements have rolled out. So if anyone has input on that, I’ll take it!

[Deleted]

Aug 28, 2019 14:19:27 GMT -5 zaneyzoo said:

Aug 28, 2019 10:28:55 GMT -5 @sameoldstory said:

My agent recommended increasing to at least 100/300/100 for the auto but I decided to go to 250/500/100 since it will only be $22 more per month. I also decreased my deductible from $1k to $500.  I had him review my homeowners and he said that I have adequate coverage there which is goo. When I asked about an Umbrella policy, he said that he only recommends them for people with over $500k in assests, which I don't have, so we're not going to do that right now. If I do decide to do it in the future, I'll need to carry 250/500/100 in auto, so at least I'll have that if/when the time comes. 

I wonder why he said that.  Big accidents and settlements don't happen just to people with >$500k in assets.  Future earnings can be taken if a settlement were to happen.  Not to scare you - it's just an interesting line of thought.

Again, you need to be comfortable with your limits.  I am glad the OP prompted you to check it out!   

What should I be looking at when trying to decide about Umbrella Insurance? Would our income matter at well? We make a decent living, but out debt cancels out a good portion of our assets. 

Sorry to highjack your post Alps79

[twilightmv]

Aug 28, 2019 15:17:46 GMT -5 @sameoldstory said:

Aug 28, 2019 14:19:27 GMT -5 zaneyzoo said:

I wonder why he said that.  Big accidents and settlements don't happen just to people with >$500k in assets.  Future earnings can be taken if a settlement were to happen.  Not to scare you - it's just an interesting line of thought.

Again, you need to be comfortable with your limits.  I am glad the OP prompted you to check it out!   

What should I be looking at when trying to decide about Umbrella Insurance? Would our income matter at well? We make a decent living, but out debt cancels out a good portion of our assets. 

Sorry to highjack your post Alps79

Umbrellas are normally a lot of bang for your buck. They are cheap and offer a ton of peace of mind. They are liability policies that are an “umbrella” of extra coverage over your home, auto, or any other underlying you may have (boats, ATVS, additional properties,etc). They also include defense costs. So if you are sued, there is an extra layer of protection between the lawsuit and your assets.
If you own a home, you should probably get a $1M umbrella.

[zaneyzoo]

Aug 28, 2019 18:35:55 GMT -5 twilightmv said:

Aug 28, 2019 15:17:46 GMT -5 @sameoldstory said:

What should I be looking at when trying to decide about Umbrella Insurance? Would our income matter at well? We make a decent living, but out debt cancels out a good portion of our assets. 

Sorry to highjack your post Alps79

Umbrellas are normally a lot of bang for your buck. They are cheap and offer a ton of peace of mind. They are liability policies that are an “umbrella” of extra coverage over your home, auto, or any other underlying you may have (boats, ATVS, additional properties,etc). They also include defense costs. So if you are sued, there is an extra layer of protection between the lawsuit and your assets.
If you own a home, you should probably get a $1M umbrella.

Exactly. An umbrella offers not only additional liability but additional protection if you get sued for libel or slander (hello social media!)

You’ll find some agents who say everyone needs an umbrella and anyone, in a sue-happy and distracted world, it’s probably more prudent to have one than not. It don’t make yourself insurance poor either. Again, it’s about what gives you peace at night.

I highly recommend them for most people.

[imojoebunny]

Aug 28, 2019 18:35:55 GMT -5 twilightmv said:

Aug 28, 2019 15:17:46 GMT -5 @sameoldstory said:

What should I be looking at when trying to decide about Umbrella Insurance? Would our income matter at well? We make a decent living, but out debt cancels out a good portion of our assets. 

Sorry to highjack your post Alps79

Umbrellas are normally a lot of bang for your buck. They are cheap and offer a ton of peace of mind. They are liability policies that are an “umbrella” of extra coverage over your home, auto, or any other underlying you may have (boats, ATVS, additional properties,etc). They also include defense costs. So if you are sued, there is an extra layer of protection between the lawsuit and your assets.
If you own a home, you should probably get a $1M umbrella.

Or a car, boat, apartment, or ATV, and make any money at all or have any assets.  Umbrella's are the unsung heroes of insurance, even if only for the fact that they defend you in a lawsuit.  It is worth the cost for that feature alone.