What do insurance limits have to do with my claim?

We might not talk to you a lot about insurance limits, but (with apologies to Willy Nelson) they are always on our mind.

To cut to the chase, if we are going to succeed in our claim, we need three things:

A serious injury
A defendant who is at least partly at fault
Access to money.

It is pointless to sue without a prospect of recovery. You cannot get blood from a stone, as they say. In some cases, the defendant is wealthy and we don’t have to worry about whether he or she is insured. But in most cases, our only recovery will come from an insurance company.

You are entitled to know at the outset if a defendant is insured and, if so, what the “limits” of that insurance are. We demand to know this at the beginning of all claims.

For many slip and fall cases, we seem to encounter insurance policies of $1m to $2m on the other side. That is almost always enough to cover a claim.

But car accidents are a different story. Car crashes can cause massive injuries with life long medical and other costs.

It is a bizarre fact that Ontario only requires $200,000 in car insurance coverage. Most policies ramp this up to $1,000,000. But even that is simply too low.

Let’s say you are out with your friends and the driver of the oncoming car is texting and collides with your truck head on. Say the other driver has $1m in coverage. Everyone in your truck will all be chasing that same $1,000,000. That may not be nearly enough.

Now, if you or one of your passengers has car insurance of your own with limits of, say, $2m, that policy will certainly help you out and you will have access to another $1m from your own insurer (under something called the “underinsured” provision of your policy).

But if your own insurer only has $1m of coverage, that amount does not “stack” with the insurance from the defendant; you are stuck sharing the $1m of the other driver’s coverage.

If we run into a problem with limits, we will tell you as soon as we find out. It will change our strategy and how we operate your claim.

As for how you can protect yourself going forward, we see more and more clients with $2 million or more in coverage. That makes a lot of sense. Bring it up with your insurance broker next time you speak with her.