Why State Minimums May Expose Your Assets

If everyone had the state minimum, apparently an attorney of the deceased can still seek punitive damages in the millions for a family when the other driver only had $25,000 in liability coverage.

I read this morning in my Property & Casualty daily publication that an attorney in Georgia representing a motorcyclist who was killed when another driver turned left into his Buick — who did not see the motorcycle that crashed into his car.

The insurance carrier paid only $25,000, which was what they contractually had to pay. The payment was rejected by the attorney. The attorney for the estate of the deceased, representing the remaining family, had received a judgment of over $24 million and is pursuing the insurance carrier for acting in "bad faith." The insurance carrier was forced to file a lawsuit against the estate and family members to obtain a declaratory judgment in federal court in Atlanta. The attorney representing the deceased driver rejected the $25,000 payment from the carrier even though that was all they had agreed to pay based on the policy selected by the insured.

The judgment of $27.1 million with interest accrued included pain and suffering in the amount of $10 million for the surviving family members. The carrier is seeking a declaratory judgment that they acted in good faith and is not required to pay beyond the $25,000 policy limit. The article went on to explain that rarely are carriers held to more than the limits of the policy coverage.

It's Not Just One Case

Last November (2024), however, a large carrier was ordered by the state of Florida Court of Appeals to pay $1.1 million in very similar circumstances — a motorcyclist killed by another driver who only had a $25,000 policy limit.

A Mississippi Supreme Court ruled in December 2024 that another well-known carrier acted in bad faith when it lowballed payment to a couple for damage caused to their home by Hurricane Katrina. The court upheld a $15.3 million judgment against the insurer, which included $10 million in punitive damages.

In the first case, the attorney going after the insurer contends that the carrier's refusal to settle the case on the terms the lawyer set makes the insurer liable.

Umbrella Premiums Are Rising — Here's Why

Recently we have seen the cost to defend extended liability provided by Personal Umbrella Policies spike with summary judgments not predicted — consequently affecting the premiums needed to maintain the balance required of insurers issuing such policies.

I once had a customer ask for a 10-million-dollar excess umbrella policy on top of his 5-million umbrella policy already in force. Apparently he had done his homework, as he was advised by the people he trusts.

Now we read about skilled attorneys who are cracking the insurance companies' vaults for amounts absurdly higher than the customer ever considered for the amounts of protection they chose to carry.

The Cheapest Surgeon Analogy

If you have heard my radio ads you have heard: "No one says I want the cheapest surgeon" — but this makes perfect sense for a lifesaving medical procedure.

By contrast, insurance is rarely more than a blip on the desirable-need radar — unless, of course, until it is needed.

Believe it or not, I have millionaires carrying the state minimum thinking they can self-insure if needed. Maybe they can, but it would be a roll of the dice for how much is needed.

Ask Yourself These Questions Right Now

• What are all my assets worth?
• Do I have enough to protect them from a crazy, never-foreseen fatality accident?
• How much more would it cost to bump my coverages higher than I have now?
• Above $500,000 in liability coverage, how do I protect myself for an extra 1–4 million or more — and can I do it for less than $1,000 a year?

Please do not get caught going cheap if it leads to financial MAYHEM.

Ask your attorney, financial planner, and CPA their opinion — then call me at 360-746-7785 if a change is right for you.