Countering “it won’t happen to me”

I often get questions like “why would anybody need liability insurance?”  Here are just a few real-life cases I’ve personally been involved with where liability insurance has saved the bacon of Seattle-area families.

Accidentally trimmed the neighbor’s trees – $125,000

Dog bit the neighbor’s 4 year old in the face – $450,000

Condo’s downstairs neighbor alleged “too loud – made me lose sleep” – paid all legal & court costs and eventually won the case after 3 years.

Son flipped the car with his friends inside, sadly killing all four – $2 million.

Several hundred of no-damage-to-the-other-car injury claims – cumulatively, probably into the millions of dollars.

Dog killed neighbor’s dog in a fight, lawsuit for emotional distress – paid all legal and court costs.

Ex-nanny suing for wrongful termination and slander – paid all legal and court costs, small settlement.

Fortunately, the probability of anything really bad happening to you is infinitesimally small.  But in my 26 years in the industry I’ve seen hundreds more cases where weird things pop up and risk interrupting a family’s financial plan.  That’s why we believe you plan for the consequence of the severity, and not the probability.

Photo:  Mt. St. Helens, WA

#1 Insurance Mistake

The most common mistake when buying insurance is not buying enough of it.  But don’t take my word for it:

  • Lawyers tell me that their clients don’t buy enough no-fault medical coverage or uninsured motorist coverage.
  • CPAs tell me their clients don’t buy enough business-interruption insurance to replace profits after a loss to a business.
  • Contractors tell me that their customers don’t buy enough home insurance to get their homes rebuilt correctly without skimping on the details.
  • Jewelers tell me their customers don’t buy enough special-valuables insurance to replace their jewelry when they lose it.
  • Business-sale consultants tell me their clients don’t buy enough post-transition insurance to protect proceeds from comeback lawsuits.
  • Wealth managers tell me their clients insure only a portion of their net worth against liability and allegations by people targeting the rich.

People don’t buy enough insurance for 5 reasons: 1) they don’t realize how expensive loss recovery is going to be, 2) they don’t believe the insurance agent trying to sell them more coverage, 3) they weren’t given information or more options to consider, 4) they don’t believe anything will happen to them, 5) they think they’re saving money.

The consequence of an insurance policy that comes up short is the most expensive insurance policy you can buy.  That’s why we believe in listening to experts, in being educated about the risks and the alternatives to financing loss, and then customizing the insurance to fit your needs

Photo: Rachael McGraw, – Siena, Italy