Can your retirement account cover that?
Most people's insurance plans can also not cover an 8 figure payout. People shop on premium cost alone.. Most have not much more then state minimums. When I was young and had no assets I only carried 40K of liability insurance. Connecticut state min is 20K.
At 20K even totaling out a mid-range compact car will max out that coverage. That's why we have "uninsured/under insured" coverage now. So when some 20 y/o driver with 25K of insurance totals my 60K car and puts me in the hospital my insurance picks up the difference.
If the 6 year old you speak of gets hit by the same driver he is just SOL. Past 25K he will have to sue the driver directly and hope he has some assets.
I do agree that putting your own retirement/home at risk just to save a few bucks a month is foolish. You could end up losing a lifetime of work for a driving mistake or something you have no control over (like your parked car catches fire in garage,burns down condo complex or hurts someone).