Insuring/Protecting yourself from serious legal liability?

Question

Say a hypothetical person has a significant net worth of about one million consisting of his home, cash, and his retirement account.
One day, this person is driving home and he runs a stop sign, hitting another person and seriously injuring him (soley through human error, no drugs, alcohol involved, etc.) He just made an honest mistake, ran the stop sign and was found 100% at fault.

Q: If the person that was hit sues the high net worth individual (because now he is a quadrapalegic), what can the high net worth individual do to protect himself from such a lawsuit and not lose everything he has earned his entire life through just a mistake like this? Can this injured person take everything away from this man and his family through a lawsuit? If the high net worth individual had a $1,000,000 umbrealla insurance policy, could the vicitm sue for an amount over and above the insurance and wipe out the man's accumulated wealth leaving him penniless? Are all assets equally at risk?

Guys, this didn't happen to me but thanks for your concern. This is just a hypothetical! Thanks.

Answer 1

All assets are equally at risk - depending on your state homesteading laws - which *might* protect the house, not from a lien, but a forced sale.

The BEST protection here is an umbrella liability policy - and with $1,000,000 in assets, you'd probably need a $2-$3M umbrella to be comfortable.

The injured person can TRY to take it away - the jury will decide, and it will depend on how pathetic the attorney can make the plaintiff sound.

Anyone can sue for anything - there is no law ANYWHERE that says, you can only sue for the insured limits. So it's up to YOU to reasonably protect your assets. And honestly, a $5mil umbrella if you have a wife, two cars, and one house, is going to run about $400 a year.

Answer 2

All assets are at risk. If I were this person I would definately increase my liability limits on all my insurance policies to the max and also purchase the biggest umbrella policy that was available through my company. If you can't find an umbrella policy big enough check with the Loyds of London to see if they offer one sufficient for your net worth. Anyone can sue you for any amount, that doesnt mean they will always get what they want.

Answer 3

I would hope not. And I don't think so. I am soo sorry you all are going thru this. Wouldn't his & your car insurance cover alot of it? You'll have to talk to your car insurance agent, they may know fall over areas like that. I hope he has some sort of life insurance that may help him, too! I can't imagine wanting to wipe out another family too, accident or none, cuz the whole family shouldn't suffer for someone else's mistake. I am very sorry & I hope the man will have empathy for you, too, & or at least for your family. {hug!} And that he will come to forgive you. (And be loving & merciful to you.) Show him that you care, say how truely sorry you are & ask him to forgive you. Kind words sometimes can turn wrath away! Best wishes to you all & that he, also, will have strength & help in his new livelihood. (Remember that it is also important to forgive yourself, beating yourself up is not edifying/constructive & won't change anything.)

Oh, thank goodness! :) What a sad hypothetical to think of, though?! Is this a plug for insurance companies? .... J/k! :))) {hug!}

But... in regards to that one celebrity that had a civil lawsuit against him, he wasn't left penniless, right? And the family that won against him hasn't seen a dime, yet.

Answer 4

Very good question......

ALL assets are at risk. Insurance will only pay up to it's limits, regardless as to what the jury verdict is. If the verdict is $5 million but you only have insurance totaling $2 million...that's all the insurance will pay. You are still on the hook for the difference, hence, all assets are at risk.

In your example, your auto policy would be primary and pay it's full limits, then your PUP policy would pay it's limits. Depending on your homeowners policy, you may have coverage there but it is highly unlikely.

Answer 5

You did no longer point out in the experience that your son has had any psychological issues or if he's in basic terms a classic youngster and that they picked on him, that could help with protection, yet each and all of the others and the gents at precise are precise. i be responsive to ail too nicely with regard to the 'bully" subject. We moved everywhere and as a toddler it became into the comparable old tale 'the hot youngster', yet i became into waiting to hone my commerce. this is unhappy that if ususally 3-5 on one and the perfect suggestion for that's a wall in the back of yo or a nook, that way it cuts the numbers which could get to you at one time and additionally you have a huge gamble. unhappy this befell. I watched the tapes of the little females being punched out on the buses and then maced there assailant or perhaps however i do no longer condone that i think of those attacking are no longer something. unhappy this hapened and seek for criminal help, i advise you ask around and examine for the perfect, yo could desire to no somebody in the criminal justice provider. take care.

Answer 6

The high net worth person needs to get an Umbrella policy. It is a policy that is over the homeowner's and auto policies, but you need both to get one. They can be purchased in million dollar increments. Talk to your insurance agent.

Answer 7

Well I have a hypothetical answer for you. This man would have to make sure he doesn't engage in fraudulent conveyance. Read here about that:

http://www.searchallinone.com/offshore-banking/asset-protection/panama-offshore-asset-protection/fraudulant-conveyance.html

A very similar situation is handled hypotheically here. I think this might be the answer you are looking for to hypotheically protect those assets quickly:

http://www.searchallinone.com/offshore-banking/asset-protection/panama-offshore-asset-protection/a-sad-story-you-need-to-read.html

So hypothetically this man needs to lose all his money fast. The above article talks about just such a hypothetical situation. People have investments go bad all the time. Isn't it weird that the best form of asset protection involves losing your shirt !

I hope this helps!