The example you have given would require a lawyer, because we don’t make that kind of mistake.
We keep having small ones. I want/need a new pool heater ($3,000) – our last one quit working and was removed two years age. Just as I was trying to find the best deal for us, my grandson totaled one of our cars. He wasn’t seriously hurt, but the insurance coverage was far below the replacement cost of similar car. In fact – it was so close to the cost of a new heater, I was shocked.
Finally, we were just about ready to start looking for a new heater, now the end of the swimming season, and prices dropped. Then our tree died a dramatic death, dropping two major branches into the street. The price to have the tree cut down – you guessed it, the same price as the new pool heater.
We bought a house for our son and his family. He had a good job, and was supposed to make the monthly payments. Three months later, he lost his job, and has only been employed on temp jobs since then, four years. Luckily, we were careful enough to buy a house we could actually afford to pay for ourselves, but it has been a very heavy burden, and I have had to do without many things I wanted.
None of this has ever threatened our primary house, or our general well being.