Is $1 Million worth of liability coverage enough? That’s the question many people are asking us. Increasingly the answer is no. When someone is injured as a result of a car accident they can sue the at fault party. Some lawsuits are frivolous, but they still take lawyers and courts resulting in defense expenses. These costs are covered by your insurance company through the liability portion of your auto insurance policy. However, there are times when the injuries are severe, such as quadriplegia or severe brain damage. There are a number of different items the courts look at in determining what any settlement or court award should be. There are costs for future care, loss of income, loss of pension, and for pain and suffering.
Take for example In 2009 an Ontario Court ruled a record $18.4 Million award to a woman as a result of an auto accident in 2002. The woman, who was 15 years old at the time of the accident and the only one to be wearing a seatbelt, suffered a fractured skull. The accident left her with multiple, permanent and catastrophic brain injuries. Truly this is a tragic accident and will affect not only the woman, but her family as well, for many years to come. That was partially why the judge made the award so high.
Do all car accidents involve catastrophic injuries? No. But, they do happen all too often and can happen to anyone in the blink of an eye. And now with that $18.4 Million award the bar has risen in terms of monetary rulings. As well, in its attempt to modify the auto insurance product in Ontario the Government in 2010 altered what kinds of injuries will be considered catastrophic. For example, the total permanent loss or loss of use of one limb, or total loss of vision in both eyes, are both considered catastrophic. If a driver struck another vehicle and a child of 4 years lost a leg as a result it would likely mean a lawsuit – imagine the costs of prosthetics, pain and suffering, lost income, and home and car alterations to accommodate wheelchairs. Any search on Google will provide you with countless numbers of personal injury lawyers offering their services to auto accident victims. What impact has this had? The frequency and cost of court awards are increasing.
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This is why we strongly recommend a Personal Umbrella Liability for no less than $5 million. This special policy will provide another layer of protection over and above the liability coverage provided by your Auto and Personal Property policies.
A true story: Valued longtime clients have given us permission to share the following. In August 1995, their teenaged son drifted over the centre line of the expressway and hit an oncoming vehicle. They were sued for $1.4 million! We had arranged a Personal Umbrella Liability policy for them some years earlier. So they knew they were fully protected and had peace of mind.
For most clients the annual cost of a $5 million Personal Liability Umbrella Policy will not be more than $250 and sometimes less. This is based on two cars and up to two residences. That’s less than a cup of coffee a day. Finally, consider this if you have more assets you have more to lose.
Click here for more information on Umbrella Liability and click here if you would like a quote.
Thanks for reading.
Click here to go back to the Fall 2014 ProvErb Newsletter.