One of the most crucial risk management questions our clients ask is: “How much liability insurance should I carry?”
This question is critical in managing risk for anybody owning a vehicle, a residential property, a business, or for anyone involved in the operation of any organization, or almost any mobile equipment.
My usual response is: “Buy as much as you can afford.” And I don’t say that to be vague or evasive. The current reality is that liability claims for seriously injuring another person can be far beyond what most people realize. In fact we often explain to clients that so far this decade, there have been 4 incidents (3 involving car accidents) where the courts assessed the financial measurement for injuries to a single person at over $10 million each.
That was true until last week – because now there is a fifth. Ontario’s Superior Court of Justice awarded a young woman $18.4 million to compensate her for injuries sustained in an August 2002 mishap. This is the highest court award in Canadian history for injuries to a single person sustained in a car accident.
At the time, the victim was a 15-year old back-seat passenger in the car of a male friend. At 1 a.m. on August 2nd, he ran a stop sign and after becoming airborne, collided into a ditch along Highway 89 (north of Toronto). Although wearing her seatbelt, the victim incurred a skull fracture which resulted in multiple, permanent brain injuries.
Of the settlement amount, approx. $15 million has been assessed for future care costs alone.
In Ontario, an overwhelming percentage of vehicle owners carry only $1 million in Third Party Liability coverage.
So I ask the question: “If an incident, even a quarter this bad had happened with my vehicle – or yours – would there be sufficient coverage to respond?”