How are worst case auto accidents covered? e.g. If a drunk driver knocks a packed school bus off a cliff

[lene22]

Because just from back of the envelope math, assuming the occupants all survive but are permanently disabled, it could easily take half a billion dollars to raise 50 8 year old kids and a few adults to 80 years old.

It seems like this would guarantee bankruptcy for small insurance companies and small to medium sized organizations self-insuring?

And obviously the vast vast majority of drivers would never be able to pay it back.

If so, who is ultimately on the hook for the damage in these cases?

 

[bbgg]

@lene22 The insurance company is only liable up to the policy maximum of the at-fault persons limits they elected. The at-fault person would be sued directly for anything above.

 

[lene22]

@bbgg As far as I'm aware there's no policy with limits anywhere close to half a billion dollars. How is the remainder covered?

 

[yesuruntruth777]

@lene22 Lawyer here. Had a case where a drunk immigrant with a $25k state minimum policy hit and killed a guy working on the highway.

Dead guy's family gets: $25K. That's all the insurance is obligated to pay. No point in going after the immigrant, who is in jail and has no assets anyway.

Luckily, through some great work, our workers comp attorney got the widow $300K.

Moral of the story: carry as much insurance as you can afford. It's much cheaper than you think. Doubling your insurance coverage does not double your premium. It increases it like 10-20%. Insurance companies do NOT advertise this fact. Also, have life insurance, no matter your age.

 

[kings9111]

@yesuruntruth777 You have to be specific about what coverages you're suggesting because most consumers haven't the foggiest idea what any of this means.

Social responsibility moral: Carry as much liability coverage as you can afford. This pays for the injuries you cause someone else by hitting them.

Selfish moral: Carry as much under insured motorist bodily injury coverage as you can afford. This is the coverage that pays for your injuries if/when you get hit by someone with insufficient liability coverage.

(Usually UMBI limits are capped at your liability limits, forcing the selfish to also be socially responsible, which is a good thing.)

 

[susan82397]

@kings9111 And get an umbrella plan if you won a home.

 

[mjb048]

@kings9111 I’ve always wondered if the UIM/Liability linked cap was ever listed as a law/regulation or it’s just the insurer’s policy. With pretty much every insurer Ive dealt with, they’ve had the two coverage caps linked so it feels too consistent to be company policies lol

 

[kings9111]

@mjb048 That's a really interesting question. I'd have to imagine it's a legal mandate because capitalism doesn't encourage that kind of seeming altruism (though there could be some moral hazardy reason I'm not thinking of).

Hope someone with an answer stumbles by.

 

[susan82397]

@yesuruntruth777 My wife and I had minimum coverage for years. We just never updated our policy. A few months ago I had an ah hah moment. I realized how stupid I was since we make really good money and own a 500k home.

Got all my limits raised quite a bit and got a million dollar umbrella plan.

Only cost me an extra 40 bucks a month.

 

[tnvet]

@yesuruntruth777 What’s the reason for life insurance if a person has no dependents?

 

[reeny]

@tnvet Your family still has to bury you is what I’ve always been told.

 

[resjudicata]

@lene22 It’s not. Once the at-fault party’s limits are exhausted, that’s it.

Happens all of the time with accidents of much less severity.

 

[lene22]

@resjudicata Is that why some jurisdictions choose to mandate a high minimum? Like Canada with it's $1 million minimum liability coverage.

 

[philomatt]

@lene22 Yes

 

[resjudicata]

@lene22 Yea which makes it all the more mind boggling that some states only require a small amount of liability coverage (like $25k).

 

[marystinnett]

@resjudicata Florida only requires $10,000 !!

 

[shatteredheart]

@lene22 The plaintiffs attorney would go after any umbrella coverage and after that or if there’s no umbrella they could pursue the tortfeasor in a civil suit where they could try to lien any personal assets and or garnish wages.

 

[jameshenry1]

@lene22 If the person who caused the accident has any assets they could be taken by the court but after that it’s over.

 

[bbgg]

@lene22 It wouldn’t be. The at-fault person would be sued, but unless they were Elon Musk, they wouldn’t need anything close to the settlement amount.

 

[dtbguy2013]

@lene22 Just btw, you shouldn't be down voted for this. It's a legitimate question.