Despite the fact that you’re normally a careful driver, you’ve caused an accident and now someone is seriously injured. You have insurance, so you think you’re covered. But if you haven’t made sure you have enough coverage, you could lose everything you own, says Michael Horst, an attorney at Baker, Donelson, Bearman, Caldwell & Berkowitz, PC.
“Bad things can happen to good people and you want to be prepared ahead of time,” says Horst. “CEOs and CFOs may not be out there driving 80,000-pound tractor trailers, but they are driving cars, and those can kill and injure people too. And if you don’t have sufficient coverage, your assets are at risk of being taken by the person you hurt.”
Smart Business spoke with Horst about what you can do now to make sure you don’t lose everything should you be found at fault in an accident.
Why does someone need more than the minimum insurance coverage?
Especially for high-income earners, having more than the minimum coverage can prevent financial catastrophe. In Georgia, you are legally required to have minimum limits of $25,000 per injured person and $50,000 per accident, although most people have something beyond that amount, generally around $100,000/$300,000. But in a case where damages far exceed those limits, the insurance company can only do so much. It can tender the limits, but if there is a million dollar judgment against you, that’s not going to cut it.
For instance, if there is a $5 million judgment against you and you have coverage of $100,000 per injured person, the insurance company will pay the first $100,000, but you are liable for the remaining $4.9 million. At that point, your house, your banks accounts, your cars, etc. are at risk, as almost any asset becomes subject to being executed on by the person who was hurt. If you operate your business as a sole proprietorship, the assets of your business could be at risk.
Even if you’re driving a company vehicle insured by your company, you are nevertheless responsible for any wrongful act you commit. And if the company’s insurance policy can’t satisfy the debt, then you as the driver may be responsible for doing so.
