Can the leader of a company be held personally responsible if one of his or her drivers causes an accident?
Generally, no, unless that person is operating his business as a sole proprietorship. However, from the perspective of that business leader’s personal life, he could be liable if a member of his family causes an accident. For instance, if your spouse is in an accident, then the joint assets of the marriage are at risk. Also, under Georgia’s family purpose doctrine, if you own and maintain an automobile for the use and convenience of your family, you become liable for the negligence of a family member when the car is being used for a family purpose.
How can you protect your assets?
The smartest thing to do is to have a high limit on your coverage. The more coverage you have, the more likely it is that any wrongful act you commit will be covered by insurance.
For example, you can buy an umbrella policy that sits over your primary policy. If you have coverage of $100,000/$300,000, you may elect to purchase an umbrella policy of, say, $2 million. In that case, you’d have a total of $2.1 million in coverage available for any person who was injured.
Most people don’t realize that these policies are not very expensive; you can get $2 million in umbrella coverage for relatively cheap. It makes good sense to have high policy limits, especially if you’re a high-income earner.
How can you figure out how much insurance you need?
The first thing to do is to examine your lifestyle and your assets. Many people may think that they don’t need coverage greater than the legal minimum because they don’t have any unencumbered assets, and that you can’t squeeze blood from a turnip. But this thinking is a huge mistake as garnishment allows the judgment creditor to receive a certain percentage of your paycheck each pay period.
So if you’re collecting a salary, irrespective of whether you’re working at a fast food restaurant or are the CEO of a multibillion-dollar company, your wages could be garnished. And if you’re a CEO, you will probably ultimately pay off that judgment, but only after enough income has been deducted from your paycheck to satisfy the judgment.
If a driver has failed to plan and buy adequate coverage, is there any recourse after he or she has caused a serious accident?
If a judgment is rendered in favor of an injured person against you and you don’t have sufficient coverage, one option — and it’s not a good one — is to file bankruptcy. As long as the accident did not stem from drunken driving or from willful and malicious acts, you can file bankruptcy to have the judgment discharged. The advantage to filing bankruptcy is that some of your assets would be protected by federal law. The downside is that your entire financial situation is thrown into chaos. Your credit will also be damaged for the next several years.
The better option is to plan ahead and obtain sufficient insurance. The amount of coverage will differ from person to person depending on salary, assets and overall financial condition, but if you purchase insurance coverage with high limits, you should be OK in most instances.
Michael Horst is an attorney at Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. Reach him at (404) 443-6719 or [email protected].
