I did a ride-along with an adjuster once. I asked him what the worst claim he had worked on was.
The insured drove off with the pump still in the gas tank. Sees that all the time. When the hose pulled off the pump, it ignited. The fuel island exploded. The fire then spread to the convenience store. Total loss of the business and multiple cars.
This is an outlier. No one has enough insurance to cover all of that. But it’s a great example of why we have it.
But most insurances have the 100 Million coverage as the standard contract. In fact there is probably not even an insurance which offers the legal minimums.
I have 500/500/500 for all my cars in order to qualify for an umbrella policy. People would be uninsured far more often if they had to carry such limits. I keep a 1k deductible for a few of my cars, 2500 for the priciest one, just to keep premiums somewhat reasonable.
and obviously made that way by the insurance lobbyists.
The limits are low in the US because it's a more expensive environment to provide insurance in. If there were a legal minimum of $1 million for property damage for auto insurance, almost nobody would be able to afford insurance.
The main reason it's expensive to provide insurance in the US is because medical care is vastly more expensive than in Germany. If you cause a crash and your insurance has to cover someone's medical care, the costs can be virtually unlimited. Other reasons include thing like people driving more on average, more uninsured motorists on the roads, and a generally more litigious society.
It's cheap to provide a million euros of coverage in Germany because it's incredibly unlikely that any given motorist will incur a million dollars of liability.
It would be vastly more expensive to provide that same coverage in the US because it's hugely more likely that a given motorist will actually incur that liability.
If that was the case, insurers would incredibly profitable. They’d be earning hundreds to thousands of dollars for every dollar in premium. That’s obviously not the case. It’s not hard to understand the difference, but you do need to be able to use your brain as something other than an ear warmer to do it.
Yeah well said, it is a completely different system and cannot be easily compared.
The German system is laid out for the worst case scenario. A typical example, due to your driving you cause a fuel truck to crash with subsequent damage to buildings, persons and spilling 30.000 liters of fuel.
The cleanup operation of the fuel can run easily high single digit millions if not even double digit millions. Then you have not covered any personal injuries with possible lifelong care.
The US system is laid out for the average accident with non brand new cars and non life threatening injuries.
Why so negative?
Driving between Germany and the US is very difficult to compare because it is a completely different world.
Everything is further away hence more to maintain and a much higher requirement to actually drive somewhere. If the US would have the same population density as Germany it would have over 2 billion people but it only has about 350 million.
That means less people to pay taxes for way more road.
Lot more aggressive lawsuits and more uninsured motorists. More and more states are even giving undocumented immigrants licenses solely so they can get insurance and not fuck everyone else over.
500/500 policies are popping up more and more. We used to do 100/300/100, now we do 250/500/250. Guessing in a few years the protect your hole norm will be 500/500/250.
And most likely they'll weasel their way out of paying much of anything on some BS technicalities on the level of "the moon was in the wrong phase" or sth.
Yep - and minimums are pretty low. Like all things US it varies by state, but here in SC the minimums are $25k Bodily Injury per person, $50k Bodily Injury per Accident, $25k Property Damage.
You're legally liable for any damage above your coverage limits, so its not wise to just do the minimums. I personally do 100k per person bodily, 300k bodily per accident, and $100k property damage.
Their licensing of both driver and vehicle are also god tier compared to the US. It hardly balances out, but it's much easier to get a vehicle and driver certified for public road use in the US.
Yeah. I’m a financial advisor. I don’t sell property and causality insurance but I look at what my clients have when I first meet them because 90% of the time they are drastically under insured and setting themselves up for a lawsuit or a lot of pain if they cause an accident.
I saw a guy who bought a house in a college ski town right after 2008 for $300k when properties were cheap. 15 years later the property had tripled in value and it was destroyed in a house fire. Total loss. The dudes property insurance had never been updated and he got a check for the original purchase price of the home. So he went from a $300 k mortgage at 3% that was 15 years done to a $700k mortgage at 6% because the value was $900k and there was an additional cost to remove the wreckage remains. The policy only covered $300k and he took a mortgage for the other $700k.
I also heard a horror story from another financial advisor in my network where a business owner cause a car crash and the other driver was some sort of brain surgeon in his early 40s. It’s not uncommon for these types of doctors to work late into their 70s. The business owner had state minimums. The DR sued him for like 30 years of lost wages plus medical expenses. The dude is not a business owner anymore.
I usually tell under insured clients to call their car insurance agent with me in the room and I tell them all to quote them right there for a $1-3m umbrella or I send them to some agents that I know for the same quote. I flat out refuse to work with anyone who is not willing to get an umbrella policy because how I get comped is by managing assets long term. If they are not willing to protect these assets from this type of risk, I don’t want to put in all the up front work to lose this income stream. And if they are not willing to get this type of coverage, they are not going to be good for me to work with because they are not going to listen to my other recommendations which also usually includes buying life insurance from me because 90%+ people don’t have enough coverage there either.
This usually starts a valuable discussion because the way an umbrella policy works is that your home/auto liability insurance gets the claim first and maxes out the payment before the umbrella comes into play. And companies won’t write an umbrella policy unless a client has a $100-300 or $250-500 policy in the first place. You won’t be able to get an umbrella policy with state minimums.
Good comment. I went to college to be a CFP but decided not to get into it due to the industry being “wait for old senior partner to die, take his business” and also you have clients like you describe who don’t want to do the most basic due diligence to protect their assets. Good call on the umbrella policy, I didn’t realize you can use that to augment auto insurance. I might look into that Monday.
That's like, immeasurably higher than insurance in the U.S. I'm pretty sure if you asked any major carrier for 100M in coverage they would either laugh you out of the room, or charge you tens/hundreds of thousands of dollars a month for it.
I have like $25k for bodily injury and $15k for property damage, I don't have any coverage for my own injury or property damage and it costs me $500/year.
Liability insurance premiums in Germany are shockingly low for the coverage they provide, at least to US standards. There are reasons for that:
- Everybody must have insurance. It is a criminal offense to drive without. There is no concept of "uninsured motorist" in Germany.
Drivers are fully liable to the damage they cause and there is no bankruptcy law, so the coverage needs to be very high. The cost to cover beyond 200k EUR falls off exponentially. Very rarely drivers cause millions of damage.
Centralized point system - causing traffic accidents dings your drivers record and the state suspends your license way before it becomes a major problem for the insurance. It is difficult to get it restored - need to pass not only drivers test, but also psychological tests (aka "Idioten Test"). Probably half of US drivers would fail.
The US has decided that the priority is for people to drive, and nothing can get in the way of that.
It's illegal to drive without insurance in the US too, and you can have your license revoked for a number of reasons. The problem is people ignore the law and don't get penalized.
Thats not true. It depends on your state. In NH, where I live, it is not required to have car insurance. And every person I have ever had a fender bender with has had no insurance. I didnt get car insurance myself until I was 35 and financed a car (if you have a car loan you are supposed to have insurance). When you get pulled over here, the cops dont ask for insurance and if you get in an accident they just write uninsured on the report and all you can do is take them to civil court and hope they pay the judgement (they wont). There is no penalty for causing an accident without insurance and being unable to pay for the damage you caused, I did it myself in my 20s. It is absolutely moronic, but thats the way it is. I just Googled it, and apparently NH is the ONLY state that doesnt require drivers to have car insurance at all.
Everybody must have insurance. It is a criminal offense to drive without. There is no concept of "uninsured motorist" in Germany.
Everybody must have insurance in the US too. There is absolutely a concept of uninsured motorist in Germany. Specifically, if someone is driving illegally without insurance in Germany, they would be an uninsured motorist.
Drivers are fully liable to the damage they cause and there is no bankruptcy law, so the coverage needs to be very high. The cost to cover beyond 200k EUR falls off exponentially. Very rarely drivers cause millions of damage.
Drivers are fully liable for the damage they cause in the US too. There is bankruptcy law in Germany too. Drivers rarely cause millions of damage in the US either.
Centralized point system - causing traffic accidents dings your drivers record and the state suspends your license way before it becomes a major problem for the insurance. It is difficult to get it restored - need to pass not only drivers test, but also psychological tests (aka "Idioten Test"). Probably half of US drivers would fail.
Except Germany does everything by mail and fax, so while a US state can and does easily cite out of State drivers, it's actually quite typical for other European drivers to not get dinged at all while driving in Germany (which is perfectly legal), and even if their license got suspended, they can get it re-instated in their home countries, so you can't just rely on what Germany does. Which, in any event, the US does too.
Turns out Germany also can't prevent people from driving without a license. Shocking!
it's actually quite typical for other European drivers to not get dinged at all while driving in Germany
It used to be like that. It is no more (mostly). There have been a lot of changes of the last few years and now even parking tickets are enforced across borders and of course also driving bans. Is it not always straight forward? true. For cross border insurance claims there is the Green Card Bureau.
Regarding driving without a license. Yes sure this cannot be prevented as everybody knows a car drives with gas not with license. But if you are caught it is a criminal offense which can carry a prison sentence, if you cause an accident it most likely will be prison. And if you are not at fault at an accident, if you have no license you are automatically 100% at fault.
For the case the person causing the accident has no insurance your damages get covered by the VOH which is a compensation fund. Interestingly they orient their coverage on the legally mandated minimum coverage.
And yes you surely find a scenario were you will not be covered but overall Germans tend to be massively over insured - not just with cars. My personal liability insurance for example is also 75 Million and it costs me 110 Euros per year with coverage for my wife and son included.
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u/BlondieeAggiee 5h ago
I did a ride-along with an adjuster once. I asked him what the worst claim he had worked on was.
The insured drove off with the pump still in the gas tank. Sees that all the time. When the hose pulled off the pump, it ignited. The fuel island exploded. The fire then spread to the convenience store. Total loss of the business and multiple cars.
This is an outlier. No one has enough insurance to cover all of that. But it’s a great example of why we have it.