Recently the trade press has published several interesting articles that discuss the best way to determine a proper limit for liability insurance. Ideas have ranged from the formulaic (typically referring to the net worth an insured wants to protect from being lost to litigation) to the broad brush. ("Insureds should buy all the insurance they can afford.") Often the dreaded errors-and-omissions phantom raised its ugly head, suggesting that an agent who fails to sell a client the highest limits available invites a malpractice claim.

One possible path to enlightenment in the ongoing search for "adequate" coverage limits may be to simply ask, "How much does the insured want to carry?" Once any minimum requirements arising from contracts, laws, regulations, licensing or other matters are met, doesn't the insured ultimately choose a limit after weighing the theoretical loss that could result from a claim against the definite loss that results from paying the premium?

The film "Cool Hand Luke" included a line that has become a movie-lore classic. Whenever one of his chain-gang prisoners would fail to meet with his approval, the prison overseer would confront the offender and, with a Southern drawl, deliver the sinister line, "What we have heah is a failure to communicate." Then the beatings (or worse) commenced. As a kid watching that movie, I learned a valuable lesson: Eating too many hard-boiled eggs at one meal is a really stupid idea-and also that communication failures can kill you, so talk to your insureds.