You're Not A Big Target

Shawn was recently in an accident, and the accident was deemed his fault. He wants to know the best way to protect his assets now in case he's sued. Dave advises Shawn to retain an attorney immediately.

QUESTION: Shawn in Colorado Springs was recently in an accident, and the accident was deemed his fault. He wants to know the best way to protect his assets now in case he’s sued. Dave advises Shawn to retain an attorney immediately.

ANSWER: You need to see an attorney immediately, because you didn’t have enough car insurance. What I would have recommended—had I caught it before this happened—would have been to keep at least $500,000 on your cars and on your house. If you’re starting to build some assets like you have, you start talking about, at that point, keeping another $1 million in a liability umbrella policy. The problem is any assets that you move now—your retirement is probably not subject to it depending on Colorado law—they can claim you did that just to hide the asset from the lawsuit, and they would be correct. In most cases, that can be undone.

You don’t have a ton of money. You’ve got some money, and you’ve done a good job, but it’s not like you’re sitting on $200,000 and they’re trying to come after all of it unfairly. I think you need an attorney immediately to keep you from losing what you do have, and since you were running around without enough insurance, it is going to cost you some money. Once their attorney realizes that you really only have a little bit of equity in your house and a little bit of cash in an emergency fund and there’s no insurance company that’s going to write them a $1 million check, they usually let their foot off the gas at that point.

You can get through this. You’re going to have a setback here. You start over, and immediately—today—go get more insurance. And soon, you need that $1 million umbrella. The point is you’re not a big target. That’s going to work to your advantage. You just begin a negotiation process. If they are truly hurt, then the $50,000 check, which in a situation like this is little bitty, that insurance company is probably going to write that pretty quickly unless this is somebody trying to scam somebody. But if somebody was truly harmed in an accident, it’s not going to be that unusual that that check is cut, and then you’re left with anything over that. Hopefully, that’ll move it for you. Get an attorney now.