Newps,

So lets say the pilot has an estate of $1M and the $1M smooth
coverage. Won't the victims just go after both?

Yep.

Not necessarily. The issue is the potential damanges involved. It's
a matter of evaluating risk and insuring it appropriately.

The most common accident is on landing, however, that sort of accident
is the least common to involve fatalities (Nall Report) as compared
with takeoff, cruise/CFIT/weather/loss of control accidents. In a
landing accident with perhaps two passengers, there may be broken
bones or slightly worse. $100,000 available insurance for each person
may or may not be enough depending on the extent of the injuries. The
plaintiff's attorney may decide to accept the $100,000 from your
insurance company, letting it off the hook for the cost of defending
you, and proceed against you if he or she feels you have adequate
assets to make it worth while, and use the $100,000 per person just
received as a war chest to build the case against you. (Yes, that can
be done.) May or may not happen. If the passengers were killed, you
can almost count on going through bankruptcy (assuming you survived)
because the $100,000 isn't going to cut it. The million smooth policy
buys you far more peace of mind. It is enough money that it would get
rid of the injury cases easily and you don't have to worry about it.
In the event of two deaths, it would probably (and we are talking risk
management) be enough to settle those as well and not place your
assets at risk. The fact that you have an additional $million in
assets does not mean someone is going to come after them when there is
adequate insurance to make it attractive enough to resolve the claims
and not make the effort to go after the personal assets, especially
when there is the risk that a jury will not award the kind of money
the plaintiff attorney hopes. And, despite the hype, there are very,
very few gigantic judgments any more. Juries have become much more
conservative, despite the hype from insurance companies and political
candidates.

The bottom line is that a million dollars of insurance is not enough
money to make a person a target any more, and hasn't been for some
years. By the same token, $100,000 sublimits are not adequate
insurance for most people who have the financial wherewithal to own an
airplane, again, that has to be examined on a person by person basis.

The other conclusion is that just because you have a million in assets
and a million smooth policy does not mean a person seeking to sue you
is going to get both. The idea is to protect that million in assets
by putting up a suitable barrier to make it difficult to get anything
at all (the insurance policy provides a defense) and a pool of money
that is adequate to resolve the vast majority of potential suits you
might face as a pilot because you messed up and had caused an accident
(a $ million smooth policy). That sort of defensive plan reduces
one's risk substantially, it will get rid of probably 95% of the types
of claims one can expect, which is all one can hope to do,
realistically. The $100,000 sublimit policy reduces the likelihood
that the majority of potential claims will be kept at arms length and
increases the risk that they will cross the castle wall and get at
your assets. It's an individual decision that, in my opinion, should
not be made flippantly by just asserting that if you have insurance
the bad guys will take all of it. If a pilot has little in the way of
assets, it may be appropriate to carry no liability insurance. The
college kids I work with ask about insurance for their flying. Unless
one is a trust fund baby, there is no reason for them to carry
insurance. However, by the time a person has put together a few
assets during the course of a lifetime and has acquired an airplane,
it's wise to give serious consideration to how best to insure it to
protect oneself and one's family financially in the event the pilot
isn't as good as he thinks he is. From what I've observed over the
years, the $100,000 sublimit policy should be viewed with great
skepticism from the standpoint of providing adequate risk protection.

All the best,
Rick