Are assets visible, in the event that someone wants to sue?

by eloisecaulfield » Tue Aug 04, 2009 08:37 am

Out of curiosity I would like to understand the following scenario: If Person A was in a car accident and was at fault, can the other party sue if their damages exceed Person A's liability coverage *if* Person A is by all appearances poor?
That is, can they or will they be willing to sue someone who: has a low wage job, rents a cheap room, and owns absolutely NO physical assets or real estate, YET has money, let's say exceeding $100,000, that is in a certificate of deposit? Can this asset be "seen"?
Would the other party somehow have a way of finding out about this online CD? How would they do this? Would they be able to search on their own, through an agency, or hire a lawyer to find out Person A's complete assets? Can they go to court to request and force Person A to admit all their assets (including CDs/online savings), under threat of perjury? Can they or their lawyer do this before they decide to sue (in order to make their decision on whether pursuing legal action would be "rewarding" for them)?

Even if Person A didn't have any assets, would they still be seen as worth suing anyway, because their future wages can be garnished? Why do a lot of people say it's not worth suing someone who has no assets... future wages can be garnished, thus, it doesn't matter whether or not a person has assets now, right?

Thank you in advance for clearing this up for me... I get really curious about the whole insurance/lawsuit/assets process because I am just a layperson.

Total Comments: 10

Posted: Tue Aug 04, 2009 10:28 am Post Subject:

If Person A was in a car accident and was at fault, can the other party sue if their damages exceed Person A's liability coverage *if* Person A is by all appearances poor?

The short answer is 'yes' you can sue...the longer answer is, 'A's carrier will not pay 'b' a nickel unless 'b' signs a release. That release will say that they won't come after 'A' for any reason. If 'b' has ''UNDER insured motorist' (p.d. or b.i. depending on what the claim is..in your example it sounds like a p.d. claim)...then 'b's carrier will likely do an asset check to see if it's worth pursueing 'A'. B's carrier will decide if B can accept the policy limits of A (only if UIM coverage is available to B)..

If no UIM, B's attorney would do an asset check to see if it is ''worth'' sueing A as well...so ''appearances'' will be inmaterial, they will KNOW if there are enough assets to pursue.

Excess limit judgements are really rare. Most people with assets of any size understand that they should protect them with decent liability limits.

YET has money, let's say exceeding $100,000, that is in a certificate of deposit? Can this asset be "seen"?

Yep, sure can...and most attorneys or carriers WOULD pursue this person...Why on earth would a person have 100k cash..and low liability limits? Explain that to me..please....

Would the other party somehow have a way of finding out about this online CD? How would they do this? Would they be able to search on their own, through an agency, or hire a lawyer to find out Person A's complete assets? Can they go to court to request and force Person A to admit all their assets (including CDs/online savings), under threat of perjury? Can they or their lawyer do this before they decide to sue (in order to make their decision on whether pursuing legal action would be "rewarding" for them

'yes' to pretty much every question...asset checks are done all the time..that person is paying income tax on the interest on their taxes every year right? The C.D. has 'A's social security number attached to it right? Big Brother knows everything..

Even if Person A didn't have any assets, would they still be seen as worth suing anyway, because their future wages can be garnished? Why do a lot of people say it's not worth suing someone who has no assets... future wages can be garnished, thus, it doesn't matter whether or not a person has assets now, right?

You're right, but most won't pursue the 'stead Joe' that is barely making ends meet...They want the full payment at judgement. Not fifty bucks a month for 100 years.. :wink:

I get really curious about the whole insurance/lawsuit/assets process because I am just a layperson

If there is anything other than hypothetical questions here, (if this is you or someone you know)...I would most certainly advise them to increase their limits to a min of 50-100 PD, and 100/300 BI

Posted: Tue Aug 04, 2009 02:11 pm Post Subject:

Thank you so much for your response, it was extremely helpful. I will admit that your excellent reply just gave me more questions though, heh.

Is it standard procedure for B's carrier to do asset checks for Person A, regardless of age, income, etc.? Can non-insurance companies legally obtain asset checks? Does the lawyer/Person B hire a private asset-check investigator or... how does this process work?

Separate question: Are people with no cash/savings but with real estate (house) considered a part of the 'stead Joe' category? Or is their house considered an asset just the same as a CD since it can be liquidated into cash? or is it considered "untouchable"?

Also, if Person B has collision coverage, their insurance company would still try to get what they can from me first, correct? I heard somewhere that Person A cannot be legally pursued unless both Person A's liability AND Person's B's own insurance has been exhausted and still found unsufficient. Can Person B really choose to not take advantage of their own insurance coverage and legally pursue Person A?

yikes... so many questions. Thank you so much again in advance for your reply. I am slowly learning!

Posted: Tue Aug 04, 2009 02:56 pm Post Subject:

Also you mentioned that waiting many years for small payments would not be desirable, but isn't that better than anything? For example if Person A is indeed broke with zero savings and the damages exceeding their liability limit are still over 50k or even 25k... wouldn't Person B still be very interested to pursue suing Person A?

Then Person A would be given a judgment and have their wages garnished anyway. I guess what I'm trying to say is, isn't the "risk" EXACTLY the same whether the at-fault driver is worth 100k or worth nothing?

*Btw, this is the point I am trying to prove to a friend. We are both non-insurance people so we were arguing back and forth about the outcomes of these hypothetical situations post accident.

Posted: Tue Aug 04, 2009 02:57 pm Post Subject:

I meant to say "isn't that better than *nothing"

Posted: Wed Aug 05, 2009 10:54 am Post Subject:

Is it standard procedure for B's carrier to do asset checks for Person A, regardless of age, income, etc.?

Yes, if there is UIM coverage and (obviously) a limits issue.

Can non-insurance companies legally obtain asset checks? Does the lawyer/Person B hire a private asset-check investigator or... how does this process work?

Anyone could run an asset check if they are willing to pay the fee to do so..

Are people with no cash/savings but with real estate (house) considered a part of the 'stead Joe' category?

I would say so yes,

Or is their house considered an asset just the same as a CD since it can be liquidated into cash? or is it considered "untouchable"?

Most states (none that I know of) won't force a sale of a persons primary dwelling to cover a judgement.

Also, if Person B has collision coverage, their insurance company would still try to get what they can from me first, correct?

No not necessarily and not wisely...What they should do, (and what generally happens) is fix their insured's vehicle under the collision coverage, then come to your carrier, and accept your PD limits for their subrogation claim, and call it a day. Your carrier won't pay your PD limits without a release, from them that they won't sue for the balance..if they did you would have a bad faith suit against your own carrier..

I heard somewhere that Person A cannot be legally pursued unless both Person A's liability AND Person's B's own insurance has been exhausted and still found unsufficient.

Are we talking ONLY of physical damage (damage to the vehicle)...They CANNOT exaust their collision coverage because that is an ACV (actual cash value) coverage...well there are some stated amount policys but that would still be considered the ACV, or what the insured feels the value is so it would be the same.

Can Person B really choose to not take advantage of their own insurance coverage and legally pursue Person A?

Yes, in most states they could..but their carrier would not be involved in the suit on this type of case, because they have not issued payment.

Also you mentioned that waiting many years for small payments would not be desirable, but isn't that better than anything?

You'd think so wouldn't you? This is really a carrier, to carrier thing...Some are pit bulls about subro, some are not...most have a subro dept that then turns over claims to a collection agency to handle..so with these types of companys yes...but again, there is a BIG difference in the subrogation pursuit of an UNDER insured person as opposed to an UNinsured person..

wouldn't Person B still be very interested to pursue suing Person A?

Person B may be but the carrier wouldn't or shouldn't be able to, because A's carrier shouldn't have released their limits without a release or judgment.

isn't the "risk" EXACTLY the same whether the at-fault driver is worth 100k or worth nothing?

No, not to a carrier, because they have to get that judgement then they have to collect on it...unless they have a good idea they could collect it easily (in full) they will most likely (every time I've ever seen) accept the policy limit and call it a day..(or allow their insured to accept it

)....*Btw, this is the point I am trying to prove to a friend

I see, the point really is that you should carry enough liability coverage to cover your assets...(and your a## :wink: )

Posted: Thu Aug 06, 2009 02:51 am Post Subject:

Thank you for your response :)

Posted: Thu Aug 06, 2009 03:15 am Post Subject:

I am re-reading all the info you have provided and am very grateful for your response. Thank you again, my curiosity has been satiated lol :)

I do have one question that I must ask, lest it keep me up at night, two actually.

First is, so any layperson can pay to do an asset check on their friend, neighbor, stranger, employer, etc? I thought that was illegal? Who do they pay and where do they go...

Also, if the insurance company or lawyer did an asset check and found two people: one with just 100K in a CD but no other assets, and one with a 100K worth house but no savings... would the person with the CD be more desirable to pursue than the person with the house because of laws protecting people's houses? Does this mean that keeping your asset in the form of a house is a sort of "barrier" and "protection"? I didn't know that a house and a CD were treated differently in a potential lawsuit... I thought ALL assets were seen as fair game equally.

Thanks again.. do I have permission to keep asking questions if more crop up lol? I just never realized how much fun learning about insurance could be :P But it really is sobering to think that most people go through life with the minimum in liability. BTW do you have any statistics on the cost incurred by the average accident/bodily injury claim. Something rough like say 10k or 100k range?

Thanks again!

Posted: Thu Aug 06, 2009 10:31 am Post Subject:

First is, so any layperson can pay to do an asset check on their friend, neighbor, stranger, employer, etc? I thought that was illegal? Who do they pay and where do they go...

Most carriers and above board folks :wink: would (I'd guess) request an authorization from said party to run an asset or credit check, but there are all kinds of firms that do this without it...it's costs, but I have no idea how much...scads of them on the net..
Most insurance carriers, potential employers etc..run credit checks all the time..they though I'm sure get permission.

would the person with the CD be more desirable to pursue than the person with the house because of laws protecting people's houses?

I would certainly think so...as I said, most states won't force a person out of their house to pay a judgment, but 100k laying around in cash is a different story all together..

Does this mean that keeping your asset in the form of a house is a sort of "barrier" and "protection"?

Well I suppose you could look at it that way, I'd prefer to look at it like, why wouldn't you want to play it safe and have enough liability coverage to protect yourself regardless..

I thought ALL assets were seen as fair game equally.

No, there aren't, most states also will not allow any disability benefits, or even unemployment in some states to be garnished..

do I have permission to keep asking questions if more crop up lol?

Certainly that's what we're here for.. :lol:

I just never realized how much fun learning about insurance could be

Insurance is a business of ''what if's''...it's the one of the few things we buy with the hope of never having to use it..so that generates a lot of 'what if this happens am i covered?etc'....

BTW do you have any statistics on the cost incurred by the average accident/bodily injury claim. Something rough like say 10k or 100k range?

No, but I'm sure you could find it on line...all companys have their own way of determining this..when a claim comes in based on the 'type' of impact, if there is an injury an average BI reserve is set based on the average claim for that type of accident...the average, or run of the mill b.i. I'd guess is around 3-5k, but this is very subjective, to region etc. and this would be for a small fender bender accident. But as an example, a small to moderate accident, two occupants take an ambulance to the hospital..that's about 2-3k each..then the e.r. is another 2-3k, then couple days later they see their docs who order a butt load of tests including mri's, now we have another 5k or so..now you could easily be at 10k in medical bills alone, that's before any loss of wage, and pain and suffering. I personally carry 100/300k, and I'm not so sure I should'nt carry a little more..(bodily injury coverage, I carry 100k PD)

Posted: Thu Aug 06, 2009 05:01 pm Post Subject:

Thank you again for your response. I've been so inspired by the reproductive nature of learning about insurance (every answer to a question produces 20 more questions!) that I've - no joke - decided to take a class at my college this fall semester called "Princples of Insurance." It's fascinating how the process works. In fact, the whole concept of being covered for astronomical monetary amounts for the cost of, relatively speaking, small payments, and the idea of risk management but also *calculated risk* (for example not opting to purchase the maximum coverage or different types of coverage, like health, due to limited finances) is very interesting.
So I'd like to personally thank you for piqueing my interest in insurance :D

Quote:
would the person with the CD be more desirable to pursue than the person with the house because of laws protecting people's houses?
"I would certainly think so...as I said, most states won't force a person out of their house to pay a judgment, but 100k laying around in cash is a different story all together.."

I can totally see why the two wouldn't be considered equal, and actually aren't treated as equal by the insurance co/lawyers apparently, but just to go out on a limb for argument's sake... what if the 100K was in a fund put aside to cover rent for a person who was renting an apartment... for like the next ten years? In that case it would be just as integral to that person's survival has a house, if not more (because the money would run out). 100K if you're a homeowner vs 100K as a non-homeowning renter should be treated differently by the insurance co's and lawyers in contemplating a lawsuit - that is, the courts do view these separately - am I correct?

Quote: I personally carry 100/300k, and I'm not so sure I should'nt carry a little more..(bodily injury coverage, I carry 100k PD)

I read somewhere that liability insurance is a function of the other person's damages and not your assets. So even if you're, like, worth a milliion, wouldn't it still be "reasonable" (if not ideal) to carry 100/300/100 for car accident liability? It just seems that the odds of an accident happening that incurs damages above this amount would be pretty extreme - and then it's a question of "are you still alive" more than the monetary damages. Or am I underestimating the likelihood that such expensive accidents occur regularly? I now see that BI is way more likely to be a high amount than PD (I used to think the opposite, because it my mind I thought "Car, ooh, expensive"). Heh.

Posted: Thu Aug 06, 2009 11:53 pm Post Subject:

So I'd like to personally thank you for piqueing my interest in insurance

ah, you're welcome honey...

what if the 100K was in a fund put aside to cover rent for a person who was renting an apartment... for like the next ten years?

I think a person would have a hard time proving that's what it was for..also I would doubt that it would be in a form (ie savings acct, c.d. etc) that would be considered untouchable.

that is, the courts do view these separately - am I correct?

yes, I would think so.

It just seems that the odds of an accident happening that incurs damages above this amount would be pretty extreme -

Yes, that's why I carry those limits... :wink: Now if I were a 'ga-zillionaire' I would have a million dollar person umbrella policy, (and in order to get that umbrella policy I would have to carry the highest limits possible on my individual policys as well). But I'm (clearly) not a butzillionaire, so I've figured, I'll do ok with 100/300/100...

and then it's a question of "are you still alive" more than the monetary damages

You'd be surprised how people (for the most part) DON'T think that way when they have a BI claim.. :roll:

Or am I underestimating the likelihood that such expensive accidents occur regularly?

No you're not when talking about a 100k injury, but 25-50k are not that uncommon, in my area. Now in CA, or NY, could be that they see 75-100k BI claims routinely..The region or area has a lot to do with BI claims value. The 'climate' (and I don't mean weather), as it relates to lawsuits, injury value etc. varies widely across the country...I

now see that BI is way more likely to be a high amount than PD (I used to think the opposite, because it my mind I thought "Car, ooh, expensive"). Heh.

Well, the difference is that a PD claim pretty much is what it is..not much subjectivity on a PD claim. A 1998 Toyota Corolla, is pretty much worth 'x' amount, and there are only so many places or ways to determine the value...on the other hand injury claims are very subjective..one person may have a headache for a day or two, take a couple of tylenol and put some ice on it, and be fine...same exact injury on another, and they went to the hospital in an ambulance, run up 20k in diagnostic charges, go to a chiropractor and/or PT for a year...see the difference?

Are assets visible, in the event that someone wants to sue?

Total Comments: 10

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