But a 50 mil judgement on a 5 mil networth individual, even a 5 mil or 6 mil judgement will leave that individual destitute. Doesn’t sound fun.

Not if you have your assets setup/held in such a way to protect a good portion of your net worth.

For that defense to function properly, you have to get every lawyer in America to decide that they're not willing to sue you for a potential $1M+ payday.

Well, not quite. It will leave that individual bankrupt, which isn't quite the same thing as destitute.

For example, retirement accounts are generally protected in bankruptcy.

You can often also keep your primary residence.

The judgment becomes just another unsecured creditor in your bankruptcy filing and has to fight for the scraps among the other creditors also at the table. This can take time and effort.

This is why injury lawyers want to know what your insurance limits are, it is the easy money they can get. Anything else is more work and may only pay a fraction of the judgment, if at all.

Mike C.

For that defense to function properly, you have to get every lawyer in America to decide that they're not willing to sue you for a potential $1M+ payday.

I suspect the vast majority of owner/pilots are flying around with $1m +/- liability coverage. I also suspect that that many, if not most, of those owners have a net worth that exceeds $1m +/-. Each year, there are hundreds of aircraft crashes that result in serious injuries or fatalities.

With that in mind, can you (or anybody) cite some actual cases where an aircraft crash resulted in the bankruptcy of the owner/pilot, due to insufficient insurance?

Barring evidence to the contrary, I tend to agree with Mike. Plaintiff attorney’s want to chase the insurance, because that is likely to result in a relatively easy settlement. Not too many of these cases actually end up in front of a jury, and even a big jury award is likely to end up with years of appeals.

I’ll add one other point, which may or may not be correct. My understanding is that policy limits do not include the cost of defense counsel. I was under the impression that an insurer owes the insured a defense, plus losses up the limits of the policy. I was also under the impression that the insurer owes you a defense even if they agree to settle for the limits of the policy. Maybe somebody with more insurance expertise can confirm or refute my understanding?

A lot of GA policies are $1mm/$100k sublimit. That usually means they pay out a maximum of $100K per passenger. Not even a speed bump in today’s litigious environment. the insured (typically the pilot) gets medical coverage and the value of their plane but no access to the liability limits. Also, any cleanup comes out of the liability limits. For example, if there is spilled gas some states will go crazy with environmental claims. This also comes out of the liability limit. So, if someone has a Bonanza and has two pax onboard, each will get $100K and the remaining will be available to other liability claims. In this case, $100K to each injured pax and maybe several hundred thousand dollars for environmental clean up. PFOS and PFOA are EPA nightmares.

For the insurance agents on this forum, please correct any misunderstandings I might have spewed or poor characterizations I might have made.

Thanks, Zeke

Lawyer who does this checking in.

I think both sides can be situationally correct. There is a valid school of thought (that works out in practice) that plaintiffs will want to collect limits and then (provided they are tendered promptly) move along. There is another scenario where, with insufficient limits and significant assets, lawyers will go for the jugular. The big issue that no one has addressed is the fact that you (acting as PIC of the lost aircraft) will almost certainly be dead and how your estate is structured is actually what we would be talking about. A good structure there could make the limits much more attractive regardless of what they are.

Also, on the work comp issue, all states have some form of employer immunity in exchange for comp benefits. As far as venue/choice of law, most states allow for either the state of injury or the state of employment to apply. More important than the actual work comp immunity, however, are the state’s coemployee liability laws. These are less uniform and how you (again, acting as PIC of a company-owned plane) could get held liable and potentially have your assets put in play. Importantly, most states recognize choice of law provisions in employment agreements for such issues, so the correct risk management play is to pick your jurisdiction (not arbitrarily), understand and insure for the risks associated with the claims you could likely face in that jurisdiction, and then structure your assets (if possible) to minimize the collectibility of any of them by a judgment creditor (generally assuming you are dead). Preinjury releases can also be an important part of your risk strategy (especially applicable flying with non-work friends and acquaintances). Again, you will need to know the law of your jurisdiction, as well as to how best enshrine that jurisdiction as the applicable choice of law.

The most important take away you should have from reading this message is to find someone who understands or can learn what you do and what you have to protect and can guide you through the scenarios. You then have to come to grip with your own risk tolerances, which will never be zero — there’s always the potential for what I will call a “generational” risk and you just have to accept that. Generally, the person you will want to consult is an attorney (but not just any attorney - it needs to be someone who has actually been “in the trenches” and experienced real risk scenarios) but there are also some savvy insurance brokers and even accountants out there who can give meaningful input.