More Scary Insurance Horror Stories to Tell in the Dark

How not having the right coverage can turn unfortunate incidents into total nightmares.
Christine Lacagnina Written by Christine Lacagnina
Christine Lacagnina
Written by Christine Lacagnina

Christine Lacagnina has written thousands of insurance-based articles for by authoring consumable, understandable content.

paul martin Reviewed by Paul Martin
paul martin
Reviewed by Paul Martin

Paul Martin is the Director of Education and Development for Myron Steves, one of the largest, most respected insurance wholesalers in the southern U.S.

Insurance Horror Stories Part 2

When things go bump in the night, it’s comforting to know your insurance is there to help protect you. That is, unless you didn’t take the time to find the right coverage in advance. If you find yourself without insurance in the face of a frightening catastrophe, the situation can quickly descend into a full-blown nightmare. That’s why it’s so important to work with an independent insurance agent to get equipped with the right coverage before things ever get ugly.

Unfortunately, these folks who lacked adequate insurance coverage didn’t get a happy ending to their tragic stories. Check out a few recaps of some truly eerie insurance horror stories that turned dramatically worse without the proper coverage, and how having the right insurance could’ve easily helped save the day for each one.

Man Overboard

On a nice summer afternoon, the Smith family decided to invite some old friends out for a ride on their boat. Their ginormous boat was equipped with many impressive amenities, including an indoor kitchen and full bar, plus plenty of lounging areas. The sea waves and breeze were incredibly relaxing, so much so that the Smiths completely forgot that they hadn’t ever bothered to purchase liability coverage for their adventures.

Everyone was having a great time just chatting, eating, and drinking. That is, until one of the family’s friends slipped on the deck and fell overboard. Though there fortunately wasn’t any blood, it was still quite a gruesome sight, and it quickly became much worse when the friend threatened to sue the Smiths for his broken arm…

Though the Smiths tried to settle matters privately, their friends were still furious with them, claiming they’d provided an unsafe environment for their trip. The family friends took the Smiths to court and won their case. Since the Smiths lacked insurance, they had to cover not only the legal fees but also their friend’s injuries out of their own pocket, and as a result ended up having to sell their beloved boat. If they’d had coverage, the trip could’ve been so much more relaxing.

How Liability Insurance Could Have Helped

Though having the right insurance may not be able to prevent injuries from happening in the first place, it can certainly prevent your finances from taking a huge hit. Liability insurance provides a lot of important protection from a legal standpoint, including coverage for the following:

  • Attorney fees
  • Court fees
  • Fines and penalties
  • Settlement fees
  • Medical payments

If the Smiths had purchased the right liability coverage beforehand, not only would they have been reimbursed for the court and settlement fees after getting sued, but their friend’s injuries also would have been covered. Liability coverage includes reimbursement for property damage and bodily injury expenses as well as other important legal protection.

Rabid Dog on the Loose

Fido was a beloved family pet, so it never occurred to his owners that one day he’d end up causing all kinds of trouble. Sadly, late one night when Fido was out in the yard, he got bitten by an infected opossum that was strolling through. As the days passed, Fido slowly started becoming more and more aggressive, though it was barely noticeable at first.

Suddenly things turned vicious. Fido dug his way out of the backyard under the fence and slipped in through the neighbors’ doggy door. He attacked both the neighbors’ dogs and all three of their kids, causing extensive injuries to each one. Before making his way back to his family’s home, Fido chewed up a pair of luxury shoes and a designer purse, then tore up the neighbors’ garden beds as he was being chased away.

Fido’s family was completely horrified by the damage he had caused. But things got much scarier when the family got the bill for all the injuries and property destruction. The liability coverage limit provided by his family’s homeowners insurance was exhausted quickly, leaving them to have to cover the rest out of pocket. Fido’s family had to resort to selling some of their beloved antiques and other collectibles and take out a second mortgage on the house to pay for it all.

How Umbrella Insurance Could Have Helped

Umbrella insurance is designed to stack on top of another policy to extend its liability coverage limits. Homeowners insurance typically includes a standard of $300,000 in liability coverage for both property damage and bodily injury claims in case you get sued. Umbrella policies come with coverage limits of $1 million, but can also be purchased in increments of $5 million or even $10 million. Policies can be stacked until you have the amount of coverage you desire.

So, if your homeowners insurance provides $300,000 worth of liability coverage and you add a $1 million umbrella policy, you’ve now increased your legal protection to $1.3 million. Having umbrella insurance is extremely important if you’re at risk of being faced with an expensive lawsuit. Dog bite claims can cost an average of $30,000, and if your dog injures multiple people, it can add up quickly. Those bitten by rabid dogs would also require expensive shots.

All Washed Up

Clarice had the perfect plan for early retirement. She was so excited to rent out her beachfront properties in California to Airbnb tenants and then kick back and relax as the profits rolled in for the rest of her days. Clarice decorated each of her charming beach cottages with a bohemian coastal theme and listed her vacation homes live on the net.

The problem was, in all of her excitement, Clarice didn’t remember to get flood insurance — for any of her properties. Though she had a couple of successful months, in true California fashion, it wasn’t long before her beachfront cottages were hit with a massive surge of waves and heavy rainfall, getting badly damaged.

Several of her properties became temporarily uninhabitable while awaiting repairs. Clarice had to spend all of her previous profits on repairing her cottages out of her own pocket, and she also lost several months worth of business while operations were suspended. To make up for the additional costs, she was forced to take another job, which pushed back her full-time Airbnb host dreams even further.

How Flood Insurance Could Have Helped

In coastal areas or places that are otherwise prone to flooding, flood insurance really shouldn’t be considered an optional coverage. In fact, in some cases having flood insurance is actually required by mortgage lenders. Flood insurance provides important protection against extensive water damage by natural sources, including:

  • Home/business structural damage: This covers the foundation of the building, (also known as the dwelling), electrical systems, indoor plumbing, built-in appliances and additional flooring installed, like carpeting. Detached structures like sheds are often covered as well.
  • Personal/business property damage: Also known as contents coverage, this includes furniture (built-in and free-standing), smaller/not built-in appliances, some food, valuables, clothing, and often business inventory.

Often for flood insurance to kick in, natural water must cover at least two acres of normally dry land. Regular homeowners and business insurance policies do not cover water damage caused by natural sources of flooding, which is why having a separate flood policy is so important.

A Missed Vital Shot

Kristy was a successful photographer. All of her clients had been satisfied with her work, so she’d never thought to purchase professional liability insurance. She had several gigs lined up for the year ahead of her, which was more than enough to cover all of her and her family’s expenses. As the sole breadwinner of the household, Kristy prided herself on her hard work.

But everything changed after one dreary Fall wedding. Following an intensely foggy morning, the ground was coated in mist. The couple still insisted on holding their ceremony outdoors, so everyone begrudgingly took their places after treading through the mushy field. Kristy assumed her position for the main event, but as she stood to prepare to capture the kiss, she slipped, clicked the shutter, and completely missed the most important shot.

The bride and groom were both furious and pressed charges. Kristy hadn’t hired a backup photographer due to being so confident in her skills. Without the appropriate protection, she was forced to cover all legal expenses out of her own pocket. To make up for the financial deficit, she had to take a job waitressing, and her teenaged daughter had to start working retail. Their household was filled with stress, and Kristy’s photography reputation never fully recovered.

How Professional Liability Insurance Could Have Helped

Many different types of professions can pose a risk to their clients or customers if work is performed incorrectly. Professional liability insurance offers these two major benefits:

  • Protection against professional errors/negligence: Any job that’s botched can result in some sort of harm, whether it’s physical, emotional, or financial. This includes a wedding photographer failing to capture one of the couple’s requested pictures. Having coverage reimburses the policyholder for legal fees in the event they are sued due to their negligence.
  • Protection against liabilities not covered under CGL insurance: Commercial general liability insurance protects businesses from legal costs relating to unintentional bodily injury/harm or property damage to customers or clients. Professional liability extends coverage to other areas of accidental harm, including performing a service that results in other forms of injury, upset, or damage.

Liability claims can cost hundreds of thousands of dollars and even bankrupt a business without the proper insurance. Beyond the tragedy of causing unintentional harm to customers or clients to begin with, having professional liability coverage can at least help your business recover from a financial standpoint.

Here’s How an Independent Insurance Agent Can Help Prevent Horror Stories

When it comes to helping you prepare for unforeseen tragedies such as boating injuries, dog bite lawsuits, flood damage, professional errors and more, no one’s better equipped for the job than an independent insurance agent. They’ll get you set up with the proper coverage from the start, and also be there for any future catastrophes. Checking with your independent insurance agent about your protection periodically can turn potential horror stories into lullabies.

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