Are Your Liability Limits Adequate?

by Jeffrey Cavignac, CPCU, ARM, RPLU, CRIS, MLIS – President, Cavignac & Associates
The following example is an actual case. Here is the claims adjuster’s analysis:

This is a 2-car accident.  The driver of the insured vehicle (our client) was attempting to make a U-turn when he pulled out in front of the claimant vehicle, causing a collision.

Liability is probable for this matter. The police report places fault only on the insured driver. The report states “Insured driver executed a U-turn when unsafe, a violation of 21801 (A) V.C”.  Also, an independent witness says the insured driver pulled out in front of the claimant vehicle, leaving no opportunity to avoid the accident.

The claimant is a 46-year old , married female who was self-employed as a dentist. She is represented by legal counsel.  I have verified online that the claimant was in a dental practice with her husband, and that her California DDS license was current.

The police report indicates that at the scene, the claimant made a complaint for neck and upper back problems, but refused any treatment. We have subsequently learned that she has undergone a discectomy and fusion surgery at the C4-C5 level  of her neck.

The claimant’s attorney alleges the claimant had to give up her dental practice due to neck injury and that she has since sold her practice. The claimant attorney indicates this financial loss is “7 figures”. Medical bills will also be significant.

This is not the time to wonder if your limits are adequate!  What are your limits? 

Most businesses carry general liability and auto liability limits of at least $1,000,000.  This is not enough!   At a minimum, you should have a $1,000,000 umbrella on top of this, providing you with total limits of $2,000,000.  We generally recommend a $5,000,000 umbrella.  Excess limits are relatively inexpensive, so make sure your liability limits are adequate!