Last month, we rolled out an Ask Us Anything column in our newsletter, so that you can send us your insurance “what ifs” and “how abouts,” and we’ll respond with advice and recommendations on how you can save money and protect all of your most important stuff…. All without having to ask your insurance carrier (who may note even hypothetical questions in your file. We know – sneaky!).
The first question is: The news about Cam Newton’s car accident made me wonder what the repercussions will be for the driver who hit him. Were I to cause an accident and injure someone, famous or not, can you tell me the policy limits and coverage that I should have to protect me against injury, damage to vehicle, etc.
Our answer: There’s really no short sweet answer to how much coverage a person should purchase. Some professionals will recommend analyzing your assets and purchasing liability limits that are of a similar value. I believe it is more complicated than that. The Cam Newton accident is a great example as to why. If the driver of this vehicle were found “At-Fault” and liable for the damages he caused, and Cam had been paralyzed (or just simply unable to perform his job any longer due to the accident), the at-fault individual would have been liable for millions of dollars.
….Let’s see, Cam is 25 years old. In July 2011, NBC Sports posted that Cam Newton was signed to a $22 Million deal, meaning that’s his market worth. That’s a whole lot of money! Again, if the individual who caused the accident and injury had been found at-fault, and had he ended Newton’s career, he’d be bankrupt. Even if Cam only had to miss a few games, if those injuries cost the driver the salary Cam gets paid per game, that’s still a lot of money. In this case, both parties were lucky, with Cam being released from the hospital with only minor injuries. But it’s best to protect yourself against any of these scenarios.
I’m of the belief and hope that it is rare for an insured person to sideline the career or someone like Cam Newton, Peyton Manning, or worse yet, Russell Wilson. That said, the insurance we purchase is there to protect us — not only from everyone else on the road, but from ourselves and damages we may cause as well.
So, back to the question at hand: how much coverage is the right amount of coverage?
This is a risk tolerance and a cost analysis question that needs to be answered. What is your net worth, how much “risk” do you want to assume, and how much do you want to pay for the “risk transfer” (insurance jargon – blah!). The bottom line is, it’s a personal preference, and one that takes some thoughtful consideration. The majority of insurance buyers out there will spend 10 times longer determining how to get the most bang for their buck shopping for their next 65” curved LED TV than considering their coverage options. (Check this one
out. Pretty sweet. I found that in 4.58 seconds…. BTW, did you know that’s Cam’s 40 yard dash time?) ;o)
I hope this is somewhat helpful. For further clarification or help determining your personal net worth and the amount of risk you are able to assume vs. transfer to your insurance policy, give me a call.