Liability Insurance..How Much $

Bigsfish said:

Check carefully the fine print in an umbrella policy, many won’t insure a boat with HP over a certain limit.

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Check the fine print in all insurance policies.

Wow, so much bad advice and poor thinking flowing on this thread. Start in reverse order. How much can you be sued for? Everything you have, including future earnings and potential inheritances. A broke 80-year old living on a clapped-out 50-year old wood-hulled trawler needs a lot less insurance than a recently-retired 60-year old with 2 houses, a nice boat, and $3 million in savings and investments. Your Umbrella should be your net worth rounded up to the next million. Your yacht policy should cover, at minimum, maximum EPA fine (over $800K) plus $1 million liability, with your Umbrella over that.

Just my two cents as a professional in the insurance industry.

Robster_in_edmonds said:

Wow, so much bad advice and poor thinking flowing on this thread. Start in reverse order. How much can you be sued for? Everything you have, including future earnings and potential inheritances. A broke 80-year old living on a clapped-out 50-year old wood-hulled trawler needs a lot less insurance than a recently-retired 60-year old with 2 houses, a nice boat, and $3 million in savings and investments. Your Umbrella should be your net worth rounded up to the next million. Your yacht policy should cover, at minimum, maximum EPA fine (over $800K) plus $1 million liability, with your Umbrella over that.

Just my two cents as a professional in the insurance industry.

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Just one thought to add. People often assume, and I've even heard of insurance agents making such a statement, that as long as you're insured for your net worth, all is fine. Well, you can be sued by a lot more than your net worth, especially if your net worth is relatively modest.

As an example. Let's say net worth is a house worth $200k, a boat worth $50k and savings and retirement of $100k. You have a $1 million policy. You're in an accident where a life is lost and based on that person's earning potential you're sued for $3 million. All efforts to settle for $1 million fail. You lose. They get the $1 million but then you're responsible for the rest.

There is no limit to your liability so don't think just because you don't have a lot, you don't have a lot to lose. 100% of what you have is a lot. 200-500% is worse.

Liability insurance and umbrella policies are relatively inexpensive for the coverage they provide, recognizing the low odds of having to pay. However, the odds mean nothing to an individual who loses all they have. If you insure, you benefit from all those who didn't have accidents. If you don't insure and have a claim against you, you get no benefit from the millions who didn't have a claim that day.

I don't know anyone who can afford to lose everything they own or will own in the future. Not rich nor poor. Every day there are hundreds of bankruptcies filed due to awards on law suits. I knew a family with a moving company that thought $10 million was enough. They had a driver driving against company policy more hours in a day than he should have and on pills to do so. He wrecked, killing five members of a family. The court awarded something like $28 million. They had to liquidate and close their business and start over.

But isnt that what many are saying....you never know what enough is?

psneeld said:

But isnt that what many are saying....you never know what enough is?

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But you do know that some amounts are clearly not enough. Added liability coverage limits and umbrella policies are relatively inexpensive compared to other policies. You can get coverage than will cover the vast majority of claims and that 99% of claimants will settle for. You can't protect against all possible risks through insurance. Those with exceptionally high risks try to protect in other ways as well, such as ownership of assets, especially any business assets.

And don’t forget in Florida you home is judgement proof until you sell it. Every time g I own is owned by its own entities except for the home I live in. Yeah it’s complicated but while I have liability insurance I need to further protect assets.

BandB said:

But you do know that some amounts are clearly not enough. Added liability coverage limits and umbrella policies are relatively inexpensive compared to other policies. You can get coverage than will cover the vast majority of claims and that 99% of claimants will settle for. You can't protect against all possible risks through insurance. Those with exceptionally high risks try to protect in other ways as well, such as ownership of assets, especially any business assets.

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Still just a roll of the dice....of course your actions and record may help.

Does anyone have an real world examples?

An example of a guy who looses his house, savings, shirt off of his back by being sued by an insurance company to cover losses beyond his insurance liability maximums?

Shrew

Most people who may fit your example employ high priced lawyers how advise the how to avoid those consequences.

Scott. Your correct, in today’s society one never knows how much they may be sued for.

Shrew said:

Does anyone have an real world examples?

An example of a guy who looses his house, savings, shirt off of his back by being sued by an insurance company to cover losses beyond his insurance liability maximums?

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I gave an example earlier of an entire family and their business, but didn't lose house, savings, shirt off back. Generally, no matter how bad the event, people do not lose their house. However, I've seen people lose everything else. If not insured, they often lose their savings just in legal fees.

You want the bizarre, here it is:

Bristol, Pennsylvania thief Terrence Dickinson planned to burgle a property. In so doing, he found himself trapped in the property because the garage door, which was his exit point, didn’t work properly. He then tried a different door, which was also faulty. He found himself trapped in the property for eight days, surviving on dry dog food and Pepsi. He sued the homeowners for his mental distress and was awarded $500,000.

I have personally known a couple of people with huge individual claims against them. One was a dog bite. They had a pit bull that somehow escaped from their back yard. No understanding at all how that happened and even a belief the victim is the one who let it out. The person who was bitten was hurt badly and rushed to the hospital. The dog was quarantined, not put to sleep since no previous record. The claim ended up something like $100k actual damages from medical and loss of work and they sued for $10 million pain and suffering. A jury awarded them $4 million. Their only option was to appeal, but the insurer had paid their maximum and said any appeal the homeowner would have to pay. Only practical way was to file bankruptcy.

Another was an apartment renter. While she had gone to the gym, the hose to her washing machine came undone and flooded her apartment and two below it. She has a renter's policy with $100k liability. The complex claimed damages of 96k. One tenant below her claimed $3k. The problem was tenant number 2. They claimed $5k on an organ $2k on another piece of furniture and $20k on a hand made heirloom persian rug they'd inherited from his mother. Meanwhile the apartment gave her an eviction notice. She had only $500 in savings and the assets in her apartment plus her car. She hired a lawyer who got them all to settle under the $100k limit but she had to put a deposit and rent down on a new place and had to pay the lawyer $5k up front and ultimately another $3k. She sold her car and got a buy here pay here deal and that gave her part of it and she borrowed the rest from her employer who had a policy against such loans but did for her. We weren't talking big money here but it wiped her out and left her with over $5k of debt. She was making about $25k a year. It shattered her emotionally.

My liability insurance is a million. The big issue is cleanup for an oil leak or sinking. In Oregon, my private dock has to have a million even though there's no oil or fuel. Because contractors are called in for fuel spills, it can hit a million fast.
A hull sister to my boat sank at the dock in Olympia. I think it went close to 2 million. Boat was in bad shape, a series of owners without the funds to maintain.

Isnt spill cleanup usually a seoaratebitem on yacht policies?

On my last 2 it was and it was way higher than the liability at first recommended by my insurers, but it seems like liability has caught up recently.

BandB said:

The claim ended up something like $100k actual damages from medical and loss of work and they sued for $10 million pain and suffering. A jury awarded them $4 million.

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Typical South Florida jury award! Miami-Dade courts are a real favorite of plaintiff attorneys.

Donsan said:

Typical South Florida jury award! Miami-Dade courts are a real favorite of plaintiff attorneys.

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Wasn't in South Florida

I would say the good insurance is well worth it. Hopefully you wont ever get any critical damage. But if you do, the cost can go up really fast. At lest the boat is in a decent shape.

Dealing with insurance this week. What I have seen is a standard yacht policy provides environmental coverage to statutory limits. The actual wording on the policy says statutory limits.


I believe the current EPA/State limit for environmental is around 800K.

Sam44 said:

I would say the good insurance is well worth it. Hopefully you wont ever get any critical damage. But if you do, the cost can go up really fast. At lest the boat is in a decent shape.

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Well my friend just got stucked in shallows... **** happens.

Its pointless having low liability insurance level - as noted above, cost for increased level is not great, and consequences of not having a reasonable level are horrendous.

For boats 50' and above in Queensland it is mandatory to carry liability cover of $250k for pollution cleanup and $10m for salvage and wreck removal. So its normal that policies have the $10m liability coverage. Marinas typically have a $5m liability coverage requirement, but I suspect that even for boats <50' the policies will be for $10m. These amounts may not be enough in some cases, but it is going to save a lot of us ordinary boaters from financial catastrophe if bad **** does happen.

One of our nearby marinas requires $10M liability for all boats who overnight there. It was only an extra $50/year to increase my liability from $2M to $10M.