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9

The keys here is both that Bankruptcy is a thing, and you are going to fight much, much harder against a suit that goes after your assets than one that goes after your insurance coverage. The distribution of accidents is going to be very non linear. Some cases are going to be 1000$, some 10000$, some 100000$, some 1 million$ and some 10 million dollars. ...


-4

The other answers miss a fairly obvious point: insurance companies and insurance agents have a strong financial motivation to sell you the largest practical policy. If they can use fear to sell you $1 million coverage rather than $100K, you'll pay them a lot more.


7

In addition to what nanoman said, there's the factor that someone coming after you very well might choose to accept the policy limit with less of a fight rather than going after you in what's basically guaranteed to be a hard fight. The insurance company will be looking at what they would spend in legal bills vs the chance of reducing the judgment. However, ...


4

My auto insurance recommends taking out a policy with a liability limit of at least my net worth. This is a bizarre recommendation for an auto policy. Maybe they are talking about an umbrella policy. E.g. here's a Geico explainer of umbrella policies: GEICO requires a minimum bodily injury limit of $300,000/$300,000 and a property damage limit of $100,000 ...


35

I'm not aware of one's personal liability in an accident being in any way limited by personal assets But in effect it is, because of bankruptcy (debts well beyond your assets can be wiped out). The guideline you asked about can be understood from two key points: Bankruptcy is not the end of the world. It is inconvenient and stressful, but sets a limit on ...


1

It is important to remember that all US citizens, at some point, have not yet learned how to drive. Everybody in America, at some point, had no driving history for an insurance company to set premiums with. So, if you have no American license, you also have no U.S. driving history. They cannot tell whether you are the worst or best driver, so they will ...


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