An accident can be devastating for both the injured person and the person who caused the accident.  In cases where there is inadequate insurance coverage available, the injured person may be undercompensated or not compensated at all for his or her injuries.  This often means, especially in New Mexico where there is a very high rate of uninsured drivers and many more individuals and families that have no health insurance, that an injured person may not even be able to obtain needed medical care.

On the flipside, the person who is liable and financially responsible for the injuries and other damages can face significant liability above and beyond available insurance coverage.  For example, if a driver has only $50,000 in auto accident liability coverage and a verdict or judgment is entered for more than the available coverage, the driver is personally liable for the excess verdict.  The same holds true for homeowner’s insurance, which will typically have liability limits of $100,000.   In fact, $50,000 or even $100,000 is not a lot of coverage with many auto accidents or other accidents resulting in injuries and damages far exceeding those amounts.

This means that if you are sued, and the damages award at trial is greater than your available liability coverage, you place yourself and your family at great financial risk.  An excess verdict can result in a judgment and/or liens against all your available assets including your home, cars, investment accounts, retirement accounts, college funds and any other financial assets that you have available for payment of the judgment.  In short, failure to carry appropriate insurance not only harms an injured victim, it can be financially devastating to the at-fault party.

To protect against exposure to excess verdicts, many individuals carry Personal Liability Umbrella Policies (PLUP).  These policies add an additional layer of protection over the auto insurance, homeowners or other liability policies.  PLUP’s are generally taken in $1 million increments up to $5 million.  Keep in mind that there are minimum prior liability coverage limits for eligibility for PLUP.  For example, the to qualify for PLUP coverage, a driver must have existing auto liability coverage of at least $250,000/$500,000 (per person/per incident).

Assuming one is qualified for PLUP coverage, the coverage is remarkably affordable and in the scheme of insurance costs is a very good deal.  Hopefully, the coverage will never be necessary but when it is, it really is!

For those with significant financial assets and potential personal exposure to liability in the unfortunate event that they cause an accident and injuries to others, failure to obtain a PLUP is almost inexcusable.  For those injured in a very serious accident, you just keep your fingers crossed and hope that the other party had the financial resources and the foresight to obtain this coverage.