I sue people for a living. In other words, I'm the person you are protecting yourself against when you buy an insurance policy.
So the question is: what is the minimum amount of insurance you need to avoid the financial disaster I can cause? You need four policies: health, automobile, home or renters, and an umbrella.
First, I know that everybody who calls Jeffrey Seidel for a quote is mostly thinking about getting the cheapest insurance possible. That’s true for me too - I wanted to save a few bucks when I called Northshire Insurance (and by the way - Jeffrey did save me some money on my premiums). But the real reason to have insurance is to avoid bigger financial problems down the road. You need just enough insurance coverage to protect your assets.
A personal injury lawyer like me is looking for insurance available to you and assets available to take from you (or “attach” in legal terms).
Do you have assets?
If you are reading this, the answer is probably “yes.” Here’s how I find out if you have assets.
When I am deciding whether to sue someone who has accidentally caused an injury (by distracted driving for example), I am looking for whether that person has assets and whether there is insurance coverage. First, I Google them. I’m looking for an indication that they have a profession, or have written articles, or are pictured on a golf course or ski vacation. I’ll assume they have assets if any of these are true. If I Google my own name, “Tristan Larson”, I can see that I’m a lawyer, that I seem to own some businesses, and I can see photos next to a fairly nice home. I can follow up on this search by looking on the Vermont Secretary of State’s website and find that I own two law office businesses and sit on the board of at least one non-profit. If I was deciding whether it was worthwhile to sue myself, these would be pretty good indications that I have some assets available.
The next thing I could do is hire a private investigator to do an asset search. Private eyes can do a few things for me - mainly find real estate, vehicles, and bank accounts in a person’s name. For a few hundred dollars, I can find out whether there are likely some assets that could satisfy a judgment against any Vermont.
So, do you have assets that could be taken? If not, you may be judgment proof and, as the saying goes, you can’t get blood from a stone.
Vermont has some specific rules about assets that can NOT be taken from you in a lawsuit. Not surprisingly, these include some very old-fashioned items like:
Yes. That is current Vermont law, and you can read more of this list here.
But apart from your sheep and goats, there are some items that are not subject to a judgment in civil court in Vermont that are really protective of your assets:
Look at that list and think about keeping your firewood and those items. Would that be enough? If not, buy insurance.
You need health insurance. I don’t need to tell you this.
You need at least $100,000/$300,000 in coverage on your vehicle.
Vermont requires that all vehicles carry $25,000 in liability insurance per person and $50,000 per accident along with $10,000 in property damage insurance. This is obviously not enough to do much if you accidentally cause a serious vehicle crash. A full-size pickup truck or minivan costs upward of $50,000, so obviously, this isn’t going to be enough insurance coverage to cover the costs of a bad crash (or even a pretty minor one).
But there’s another reason why this isn't enough coverage. That money protects other people, but it also protects you. First, if I sue you on behalf of a person who was in a crash with you or someone else driving your car, that isn’t going to be enough money to cover you. So I will also try to take away any financial assets you have. Second, you will not have any insurance to cover yourself if you are the victim of a car crash with a minimally insured driver. Underinsured motorist coverage comes with this insurance and means that if you are injured by someone who has no insurance (which happens all the time!) or someone who bought only $25,000 worth, you will be covered by your own policy. It’s pretty easy to have a hospital bill for $100,000, so this is a good idea.
If you have a mortgage, you have to have homeowner’s insurance. Of course, this coverage protects your house from fire, etc., but it also covers you and your family from lawsuits for injuries that happen on your property or elsewhere. As a personal injury lawyer, I have gotten insurance money from homeowners’ policies for injuries caused by skiing into someone, from a teenager throwing a can of spray-paint onto a bonfire (don’t do that by the way - really really and go tell your teenager not to do that), and publishing unauthorized photographs. These are injuries that people caused (usually teenagers by the way) that weren’t caused by driving a motor vehicle.
This is the cheapest insurance going. My umbrella policy costs about $100 per year and provides a LOT of coverage in case the other policies don’t (i.e. if I get sued for a lot more money than is available in the automobile policy). This is the capstone of the insurance plan described here.
My advice is to get an umbrella policy, and the two or three policies that the umbrella requires (automobile liability and homeowners/renters). If you have money in a bank account or real estate worth more than $125,000 or have investments that aren’t retirement savings, these policies will protect you if an injury lawyer comes calling.