Auto insurance: 1 million or 2?

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HardWorker
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Auto insurance: 1 million or 2?

Post by HardWorker »

For my little car I believe a million is adequate, but for my diesel SUV I'm thinking I should carry the 2 million because the trailer I tow is heavy and could cause some damage, God forbid it comes loose on the highway. I was playing with the online quoter, and it seems that it'll cost me $35 extra for the 6 months I'll be towing, so I'm getting it.

I'm curious if you guys/gals carry the typical million, or if you've opted for 2 million public liability?

I don't know how accurate THIS site is, but it shows you the various minimum coverages required in different provinces and states. Michigan is only 40K :shock:
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Re: Auto insurance: 1 million or 2?

Post by brucecohen »

We have the minimum liability on our auto insurance but a matched liability umbrella policy that ups total coverage to $2 million. We opted for $2 million because we drive in the US several times a year. The umbrella covers both cars and house.
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Re: Auto insurance: 1 million or 2?

Post by marty123 »

The size of the vehicle matters little. A smart car can still kill any cyclist or pedestrian it hits, and can still handicap a passenger that's in your car.

If you can't afford the extra $100/yr it would cost to raise the liability to $2M (I think it's even less), then an option could be to raise your collision deductible to compensate. Insurance is meant to cover those catastrophies which you can't afford to pay. If you can't afford a $900K judgement plus $500K of legal fees, then bump up the insurance to $2M, or get umbrella coverage as suggested by Bruce.
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Re: Auto insurance: 1 million or 2?

Post by Bylo Selhi »

HardWorker wrote:For my little car I believe a million is adequate, but for my diesel SUV I'm thinking I should carry the 2 million because the trailer I tow is heavy and could cause some damage, God forbid it comes loose on the highway.
I think you're missing the issue. If your "little car" is involved in an accident where someone becomes a paraplegic, and they sue you successfully, then even $2M may be too little coverage, especially if you have substantial assets like a paid-for home or a business (or even just a patent ;).) While such large awards are still rare in Canada, they're not unheard of.

Remember that insurance shouldn't be meant to cover fender benders but rather to cover you in case of a catastrophic loss like a multi-million dollar liability judgment. FWIW I've had $2M liability coverage on both of our cars for maybe 20 years now. Back in the day when I asked for a quote such coverage was so rare that the insurer's underwriting department insisted that I explain why I thought I needed it.
I was playing with the online quoter, and it seems that it'll cost me $35 extra for the 6 months
That seems a bit high. The last time I compared $1M to $2M liability premiums (a few years ago) the difference was something like $20 per year. Maybe that increase reflects the increasing probability that they'll have to eat a $2M judgment.
the various minimum coverages required in different provinces and states. Michigan is only 40K
US minimums have been notoriously low for decades. Last time I looked US car rental agencies tended to insure their vehicles only for those minimums. That's something you should consider when renting a car in the US, i.e. make sure your personal insurance applies to stateside car rentals.
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Re: Auto insurance: 1 million or 2?

Post by ockham »

IMHO extended third party liability coverage is essential, and it's cheap. Grievous bodily harm examples are the first to come to mind, but property damage claims can also be huge, where the other vehicles involved are transport trucks or trains. The size of the vehicle you are operating is not relevant to gauging the need for this coverage.
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Re: Auto insurance: 1 million or 2?

Post by AltaRed »

Similar to Bruce, I carry $1 million liability on each of house and car, but also an additional $1 million umbrella liability to cover home, car and a piece of recreational/vacant property I own. A person could trespass on my vacant property, climb a tree and fall off on his head paralyzing him forever. Liability is probably the cheapest protection available. Why take a chance?

My auto insurance also includes a 'touring' component covering me in any vehicle I drive in North America.
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Re: Auto insurance: 1 million or 2?

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$1 million doesn't seem like a lot. In Quebec I have that much and it's not even for people. Our drivers license covers that. The upside is, I can't sued for that anyway.

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Re: Auto insurance: 1 million or 2?

Post by Shakespeare »

Just increased my umbrella from $1M to $2m ($2.3 total . Cost: $54/year. :thumbsup:
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Re: Auto insurance: 1 million or 2?

Post by FinEcon »

1 million liability in auto? I realize a lot of people do it but from a risk management perspective, egads, I wouldn't go that light on liability insurance. I have 3 million liability and have considered 5.

Remember when discussing insurance, you ought to assume the accident(s) is conditional, so now we're only discussing the possibility of damages to a yourself, your passengers, another person, their passengers and of course the multi-vehicle clusterf*ck.

Also, it doesn't take much to maim a motorcyclist, cyclist, etc and heaven forbit you f*ck up a person having a bright future ie a high actuarial estimate of lifetime earnings. Think junior hockey player or putting a surgeon out of work for a year. You are much better off going maximum catastrophe coverage with a higher incident deductible if the premiums offend you.
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Re: Auto insurance: 1 million or 2?

Post by Bylo Selhi »

FinEcon wrote:Also, it doesn't take much to maim a motorcyclist, cyclist, etc and heaven forbit you f*ck up a person having a bright future ie a high actuarial estimate of lifetime earnings. Think junior hockey player or putting a surgeon out of work for a year.
Conclusion: If you find yourself in an accident situation (a) try to kill rather than just maim any of your victims (because death is final but a paraplegic will require a lifetime of care in addition to the "high actuarial estimate of lifetime earnings") and (b) aim for those under 18 years old (because they don't yet have a "bright future...") or those over 65 years of age (because they no longer have a "bright future...") :twisted:
You are much better off going maximum catastrophe coverage with a higher incident deductible if the premiums offend you.
The likelihood of breaking through a $2M or more judgment in Canada is low, as reflected by the marginal cost of coverage, whether on an auto policy or a separate umbrella policy. I doubt that raising the deductible, unless it's to something like $1M, is going to have any appreciable effect on the premium.
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Re: Auto insurance: 1 million or 2?

Post by AltaRed »

Bylo Selhi wrote:The likelihood of breaking through a $2M or more judgment in Canada is low, as reflected by the marginal cost of coverage, whether on an auto policy or a separate umbrella policy. I doubt that raising the deductible, unless it's to something like $1M, is going to have any appreciable effect on the premium.
My bold.... When I had the coverage discussion with my insurance agent a couple of times the last 5 years, she confirmed there have been few judgments beyond $1 million (yet), never mind $2 million, and thus the reason the premium is 'cheap'. But the possibility (and actuality) of judgments beyond $1 million is still the very good reason to purchase it.
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Re: Auto insurance: 1 million or 2?

Post by Bylo Selhi »

I wasn't arguing against having $2M+ in liability coverage. To the contrary, we have an umbrella policy on top of our $2M auto coverage. My points are (a) that the low marginal premium confirms the low risk and (b) that a high deductible isn't likely to have material effect on that premium.

But as I've said many times before, the purpose of insurance is (or should be) to cover you from rare black swan droppings, not to pay for routine minor stuff like fender benders. I can afford to pay for fender benders out of my own pocket. I can't afford to pay for the lifetime care needs and lost personal capital of a 20-something star hockey player (or bond trader) who's become a paraplegic in an accident that I was involved in.
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Re: Auto insurance: 1 million or 2?

Post by HardWorker »

My premium, and the wife's are certainly reasonable (compared to others in our age group), and an extra 100 bucks or so isn't a big deal at all. However, one thing I certainly hate, is over buying anything, including insurance. I thought the 2 mill was a rarity still, and not all companies offered it. What exactly is an umbrella policy? Is that a personal liability policy just in case you get sued? In that case, could I just purchase an extra million or 2 for the wife and I? That way the vehicles, house, and recreational vehicles have extra coverage. Bruce, I'm assuming you went with the 200K from your auto company, and then 1.8 from the umbrella?

I know the size of the car isn't always the determining factor, but I mentioned it because I tow heavy, which increases the risk obviously. And I have read (and have posted it) that having a paid off house makes for a better target, sheesh. Now how is it that minimum coverages are so damn low in the most litigious country in the world?
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Re: Auto insurance: 1 million or 2?

Post by j831robert »

We are similar to brucecohen and AltaRed - 2 mil and coverage for any vehicle we drive. Quarterly visits to Las Vegas/Reno where we rent a car and join all the other idiots from all over the world who bring our bad driving habits on holidays with us. I recall news articles about one old dear in Las Vegas (a local) who was well known to the police for her proclavity for being in/causing accidents while another popular passtime was apparently for some of the younger population to load up their junkers with friends and then cause/fake an collison and start screaming with faux sore backs/necks/whatever and making a living out of it off the insurance claims. Really just an 'ounce of precaution....' thing with us.
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Re: Auto insurance: 1 million or 2?

Post by brucecohen »

HardWorker wrote:What exactly is an umbrella policy?
It's a policy that protects you against any liability claim that's not business-related. Car, home, rental vehicle, etc. I don't recall what my split is between the auto and umbrella policy. They're both with the same insurer -- which is important. My recollection is that insurer required us to take $x of liability on the cars and then covered $y under the umbrella. If you deal with a property & casualty insurance broker it's a slam-dunk. I don't know if it's available online or through call centre agents.

Frankly, my view is that if your insurance need is not plain vanilla, you should deal with a broker. And I don't think towing a heavy trailer is plain vanilla.
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Re: Auto insurance: 1 million or 2?

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I'll have to call my company and find out if they offer umbrella policies. If they don't, are there companies that specifically sell umbrella policies? Are there family umbrella policies, or does each member have to carry their own?


Edit: BTW, I forgot to mention we like to road trip in Canada and the US as well. Some of you may remember a few years ago where a moron jumped in front of me at a traffic light, claimed it was my fault, and the cops charged me with careless driving for barely nicking her bumper (and I mean barely). The case was later dropped and I was cleared, but after that I bought a used camcorder and now mount it on the dashboard anytime we take a road trip, especially in the US. I thought I should mention that to you guys, and I consider it $60 very well spent.
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Re: Auto insurance: 1 million or 2?

Post by brucecohen »

HardWorker wrote:I'll have to call my company and find out if they offer umbrella policies. If they don't, are there companies that specifically sell umbrella policies? Are there family umbrella policies, or does each member have to carry their own?
One umbrella would cover you and spouse. Your umbrella should be from the same company as your auto and home insurance.* Otherwise, you're inviting a game of dueling insurers should there be a major claim.

* Others might disagree, but I'm conditioned to insure both home and auto with the same company. That generates a multi-line discount and would spare me the grief of dueling insurers if a valuable household item was even stolen from my car or damaged in an accident.
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Re: Auto insurance: 1 million or 2?

Post by HardWorker »

I'm glad I brought this up, so much learned. My current company doesn't provide umbrella policies, so I have some calling around to do.

I have a little different question if someone can answer it please. My home deed is in my name, and is so the insurance policy, what happens if I burn in the house? Does my estate get the insurance policy? I don't have a full blown will yet, just a hand written note in a safety box for now. I got married recently, and I'm making sure I'm covering all bases, but man oh man is there ever a lot of paper work and things to consider.

Cheers and thanks for the help.
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Re: Auto insurance: 1 million or 2?

Post by brucecohen »

Though not ideal, an unwitnessed handwritten will is OK as long as it's entirely handwritten. I think this is the Canadian case cited most often:
On June 8, 1948 in Saskatchewan, Canada, a farmer named Cecil George Harris who had become trapped under his own tractor carved a will into the tractor's fender. It read "In case I die in this mess I leave all to the wife. Cecil Geo. Harris" The fender was probated and stood as his will. The fender is currently on display at the University of Saskatchewan College of Law law library.
ISTM that if you your house burned down and you died in the blaze, the insurance payment would be made to your estate. But IANAL. That would be an interesting case since normally an insurer makes full payment only if the house is rebuilt. I doubt that an executor would want that hassle, so the insurer would likely make only a partial payment.
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Re: Auto insurance: 1 million or 2?

Post by Peculiar_Investor »

brucecohen wrote:It's a policy that protects you against any liability claim that's not business-related. Car, home, rental vehicle, etc. I don't recall what my split is between the auto and umbrella policy. They're both with the same insurer -- which is important.
For reasons beyond my control, I'm unable to use the same insurer for both home and autos. I deal with an independent broker who has both policies. What is the importance of using the same insurer? Is it still possible to get an umbrella policy without having the same insurer? Inquiring minds want to know.
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Re: Auto insurance: 1 million or 2?

Post by Bylo Selhi »

Peculiar_Investor wrote:What is the importance of using the same insurer? Is it still possible to get an umbrella policy without having the same insurer? Inquiring minds want to know.
Upthread Bruce wrote:Your umbrella should be from the same company as your auto and home insurance.* Otherwise, you're inviting a game of dueling insurers should there be a major claim.

* Others might disagree, but I'm conditioned to insure both home and auto with the same company. That generates a multi-line discount and would spare me the grief of dueling insurers if a valuable household item was even stolen from my car or damaged in an accident.
Bruce's scenario is relatively minor. Imagine a scenario something like this: You're pulling into your driveway in your car. You have a passenger. The driveway is iced up so when you apply the brakes the car skids into the house. This triggers the air bags. Your passenger's air bag deploys severing their spinal cord, making them paraplegic. IOW it may not be clear [IANAL] if this is covered by your auto or home insurance. If you have separate insurers, they'll try to pin the liability on the other. They can't do that if they're the same company.
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Re: Auto insurance: 1 million or 2?

Post by Peculiar_Investor »

:oops: I can't believe that I missed that other post from Bruce.
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Re: Auto insurance: 1 million or 2?

Post by j831robert »

Hardworker - as another Ontarioan just check with your agent for coverage under NPCF 27 - Liability for Damage to Non-Owned Vehicles - used to cost me about $32 per annum but is now included(hidden) along with my Comprehensive.
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Re: Auto insurance: 1 million or 2?

Post by Gus »

We have $5mm for the vehicle we use to drive to the US and $1mm for the car we use locally. I think I'll consider bumping that to $2mm next time we renew on our short-haul vehicle. Using the same companies for home and auto is not an option for BCers.
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Re: Auto insurance: 1 million or 2?

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j831robert wrote:Hardworker - as another Ontarioan just check with your agent for coverage under NPCF 27 - Liability for Damage to Non-Owned Vehicles - used to cost me about $32 per annum but is now included(hidden) along with my Comprehensive.
I viewed my policy online and I couldn't find that coverage code, I'll have to call and find out. Would this be for rental cars for example? Or if I drive someone else's car?


On another note, I called my company last week and they don't offer umbrella policies. I called a couple of brokers and they said umbrella policies aren't very popular and very few companies offer them. I'll have to call around some more and find a good company, or at least find a broker that deals with them. Can anyone suggest a company or two. From the sounds of it, umbrella policies are the way to go for increased coverage, but if I can't find any, I guess I'll just increase the limits to 2 million each.

P.S. since we're talking about car insurance, I really suggest getting "Crash Proof/Accident Forgiveness" or whatever your company calls it. Its where they won't raise your rates for your first at fault accident. Its worth the extra $40-$50. I'm a 10 star driver, and my wife is 7, and we both qualified for the coverage. Our first at fault accident will be forgiven, and the second will be 50% deemed at fault.
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