Margareth & Rich Hauswirth
One of the most intriguing, undervalued benefits of your personal insurance is the “free” lawyer part.
It’s easy to pick on lawyers, I know, until you need one. And if you ever looked at the cost, it’s a bunch. $250-$500 an hour billed in 15 minute increments, plus “costs,” ( everything from express mail, experts, photocopies, depositions, on and on.). And should you ever have to go to court? Never mind, you can’t afford it. Settle now.
When I say “free,” I mean free to you. Your insurance company foots the bill. Let me explain.
Your insurance company (in exchange for all rights to settle claims against you) “picks and pays” for your legal defense.
Your policy is an agreement, a contract. The standard language says the insurance company agrees:
“to pay for damages for bodily injury or property damage for which any insured becomes legally responsible because of an auto accident…In addition to our limit of liability, we will pay all defense costs we incur.”
Emphasis on “all.” Naturally, the company has an interest in getting the best, experienced legal help since it’s their money on the line (i.e., your limits of liability).
In order to keep the free attorney, though, it’s important to keep your insurance company on the hook. If the insurance runs out, so does the free attorney. There’s the catch. The clause continues like this:
“Our duty to settle or defend ends when our limit of liability for this coverage had been exhausted by payment of maximum limit of liability. “
This is the “free lawyer” part I think is so valuable. If you only have, say, $100,000 of car insurance and cause an accident with five times that amount, your insurance company is going to cut you loose and pay your plaintiff it’s $100,000 and be gone. This leaves you to negotiate and pay for the remaining obligation. Legal fees and settlement.
My point is simple. You want lots of insurance-at least $250,000 for your auto and home plus a $1 million personal liability policy, at least. This way, your pretty much guaranteed your insurance company is going to stick around with the free attorney until a just settlement is reached.
Remember this, an insurance company will not defend you ’on principle.’ If they can settle and go, they will-leaving you in a lurch.
Let’s avoid this and bulk up on liability insurance.
The obvious part about your policy is that it pays for damages for bodily injury or property damage for which you become legally responsible because of an auto accident.
How do you do this?
Buy large limits of liability including a personal umbrella.
Excellent article