Some folks might say…" well our rates will go up if the verdict is too high."
Again, you would be violating your oath as a juror if you considered non-evidentiary matters such as the impact on insurance rates. But for purposes of this article, we need to understand that the facts don't support the idea that jury verdicts or claims cause an increase in insurance rates because the premium revenue is almost always enough to pay the claims. Insurance companies employ hundreds if not thousands of actuaries whose sole purpose is to make sure the revenue from premiums cover the claims/jury verdicts. As we discussed in earlier newsletters on this topic, tort claim filings have actually gone down according to well regarded studies from the National State Courts.
Additionally, in a worst case scenario for an insurance company, the revenue from investments can be used to cover any shortfalls. In that case, the insurance companies shareholders might not get as big of dividend or their share value might not appreciate as much. It seems to me to be more important to make someone whole (reimburse them for their losses) than ensure that an investor gets a bigger dividend or large appreciation in their stock portfolio. Or perhaps insurance executives might have to reduce their multi million dollar salaries if they come up short on the premium side. In 2014 and 2015, the State Farm CEO made 12.86 and 13.34 million dollars. ( See link https://insurancenewsnet.com/oarticle/state-farms-rust-got-raise-in-final-year-as-ceo.
I am not picking on State Farm which I consider to be a well-run insurance company. And I fight with them all of the time. However, I could not find public disclosures of how many insurance executives earn more than $500,000 per year. Nor did I find how much insurance companies spend on advertising dollars competing with each other for business. Perhaps a reduction in these expense categories would be more appropriate than not making the regular people who suffer real injuries, damages and losses whole in those situations where people rely upon the insurance companies to reimburse them for their losses.
How much insurance should you carry?
Georgia law requires that everyone purchase automobile liability insurance. However, the minimum level of coverage imposed under the law is often not adequate to cover the losses or protect us from claims.
Purchasing the right amount of coverage protects you against a loss to your dwelling, personal property, and vehicle. It also provides protection from claims made by third parties for any negligent acts committed by you, someone in your household, or permissive users of your car. The higher your liability insurance limits, the less likely your personal assets are at risk due to your negligence.
The coverage limits listed below are higher than the minimum coverage the law requires and is a good starting point for most households:
$100,000 per person Bodily Injury Liability
$300,000 per accident Bodily Injury Liability
$100,000 Property Damage Liability
$ 25,000 Medical Payments Benefits
$ 10,000 Loss of Income Benefits (If available)
$100,000 per person Uninsured/Under-insured Motorist Bodily Injury Liability ADD -ON coverage
$300,000 per accident Uninsured/Under-insured Motorist Bodily Injury Liability ADD-On coverage
$ 50,000 per accident Uninsured/Under-insured Motorist Property Damage Liability
If you can afford higher overages, you should consider increasing your coverage as much as reasonably possible. You can also purchase $1,000,000 in personal liability umbrella coverage and $1,000,000 of additional uninsured/under-insured motorist bodily injury coverage for very little cost, relative to the coverage provided. Liability coverage is important to protect you from any claim that a third party may make against you. Uninsured/under-insured motorist liability coverage is important because it allows you to make a claim against your own policy if a defendant does not have insurance coverage or may not have adequate insurance coverage.
There are two types of UM coverage available under Georgia Law, typically known as “add-on” or “set-off” UM coverage.
Under add-on coverage, your UM limits of coverage are added on to the coverage available from the at fault party. Under set-off UM coverage, the at fault party's liability coverage is subtracted from your UM limits to calculate the amount of available UM coverage. Add-on UM insurance provides the best possible coverage for you.
Medical Payments coverage will pay for any treatment costs related to injuries you suffer in a motor vehicle accident as a driver or passenger. This coverage is very important, especially if you do not have health insurance, or you have high annual co-pays or deductibles under your Health Plan. Loss of income benefits are important because it allows you to recover for loss of income immediately, rather than having to wait until the time of settlement or judgment against the at fault party.
If you own a home or you are renting a home or apartment, you should purchase liability insurance coverage with your homeowner's/renter's policy and attempt to consolidate with your auto coverage to achieve discounts. Also, I suggest that you insure the structure and contents to 100% of replacement cost.
You may require other types of insurance coverage not mentioned in this letter. To make sure that you are adequately insured, you should consult with an insurance agent and you should review all of your policies and their coverage limits at least annually.