Recent news coverage of the fatal car crash in California in which Bruce Jenner was involved raises important issues that virtually all drivers should consider when buying insurance. Regardless of the criminal charges that Jenner may face, his potential civil liability could have a significant impact on his personal wealth, if his reported liability coverage of $250,000 per person can be believed. Likewise, absent his personal wealth, his limited coverage could severely diminish the availability of compensation for the victims if they did not protect themselves with uninsured motorist coverage.
From the claimants’ perspective, it appears that the beneficiaries of the deceased driver and several others involved in the accident will all be sharing in Jenner’s insurance coverage, which is reported to be a $250,000 policy. From Jenner’s perspective, to the extent the value of the aggregate claims of the injured victims exceeds a total of $250,000, his personal assets may be at risk for the payment of accident related judgments.
LESSON NUMBER ONE
Increasing Coverage. In hindsight, Jenner and those who might make claims against him could have fully protected themselves against the economic uncertainty they now face by purchasing better policies for a relatively small sum of money. Unfortunately, most people think that the cost of insurance increases in direct proportion to the amount coverage purchased. As a result, they incorrectly conclude that they cannot afford higher levels of coverage. The reality is that policy maximums can be increased significantly without adding enormous costs. Why?
Fact: In Virginia, approximately 90% of the 70,000 auto claims filed annually settle for less than $25,000. The majority of premium dollars go to that first $25,000 of exposure to the insurance company.
Because catastrophic accidents and claims are far less frequent than minor impact accidents, the more policy limits are raised the lower the cost per thousand dollars of increased coverage. For example, a $500,000 liability policy (not including collision coverage) for an adult driver in Virginia without bad driving points will cost about $500 per year. For about $50 per year more, that policy could be doubled to $1,000,000.
Bruce Jenner should have purchased a $1,000,000 liability policy and, given his high net worth, he should have purchased a $10,000,000 umbrella policy that would have provided coverage on top of the liability policy limit. Because verdicts and settlements of auto claims above $1,000,000 are so rare, the umbrella policy would likely have cost Mr. Jenner less than $2,500 per year.
LESSON NUMBER TWO
Underinsured Motorist Coverage. With 15-20% of all drivers nationwide being on the road without ANY insurance coverage, any prudent person should buy Uninsured and Underinsured Motorist (UM/UIM) coverage. This coverage kicks in when the at-fault driver has no insurance or does not have enough insurance. It is also relatively inexpensive coverage, particularly at the higher levels. In the Jenner accident, if the victims have UM/UIM coverage in amounts sufficient to compensate them for their accident related injuries, they do not have to rely exclusively on Mr. Jenner’s coverage; they can always turn to their own coverage, if his turns out to be inadequate.
An important last thought. Insurance is needed most in those rare catastrophic circumstances that most are lucky enough to avoid. Common sense tells us that frequently occurring losses will be more expensive to insure against than infrequent events on a dollar for dollar basis. Accordingly, prudent purchasing of insurance might include high deductibles, because those losses can be absorbed and high policy limits funded by the high deductible savings for those catastrophic events that most of cannot absorb economically.
We know from many years of experience that major car crashes can lead to very difficult insurance claims, sometimes lasting years to settle. If you think you might need experienced legal help to navigate a complex auto injury claim, call Burnett & Williams for a free consultation.