Guarding Against Significant Loss
umbrella liability coverage and coverage for the home structure traded places as the top contender. Other types of liability coverage — such as uninsured/underinsured liability, worker’s compensation, and employment practices liability — also figured prominently when lumped together.
To help families and their advisors understand the dynamics and dangers of the most common areas of underinsurance, this white paper offers the following explanations:
92 Percent Said Likely Underinsured
In today’s economic and social climate, wealthy families increasingly fear that they will become the target of a high stakes personal liability lawsuit. According to an ACE survey about liability risk among households with $5 million or more in investable assets, 38 percent felt they were more likely to be sued in the aftermath of the economic and financial crisis, while only 7 percent felt they were less likely to be sued.3 Furthermore, 82 percent of the respondents believed their wealth alone made them an attractive target for a liability lawsuit.
Their fears are well founded. In many states, someone who is 1 percent responsible for an accident can be held liable for 100 percent of the damages to the injured parties under the laws of joint and several liability. Consequently, plaintiff lawyers often look to sue the party most able to pay instead of the party most at fault.
Moreover, jury awards and settlements can greatly exceed what wealthy families imagine as the worst case scenario. In the ACE liability risk survey, half thought that the highest amount of damages they could be held liable for in an accident involving serious injury was less than $5 million. The truth: jury awards and settlements can reach into the tens of millions of dollars. In 2008, $29 million was awarded to the family of a four-year-old boy who suffered a debilitating spinal cord injury while riding as a passenger in a vehicle involved in a head-on collision. In 2012, a wealthy Floridian was convicted of manslaughter due to an auto accident and settled a related civil case for $46 million.