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 Umbrella’s aren’t just for rain.

Umbrella’s aren’t just for rain.

We all know we need insurance—auto, home, expensive belongings, etc.  But, the big question is do you have enough?  And how do you know you do, especially when something like a lawsuit is filed.  You shouldn’t have to worry about being sued and losing everything you have worked for.  How to protect yourself?  It’s called an umbrella and its your money’s best friend.An umbrella policy sits on top of your existing homeowners or auto policy—thus the name, umbrella.  There is no deductible on an umbrella.  You pay the original insurance deductible and when that policy maxes out, your umbrella kicks in.

Umbrella is extra liability coverage that protects you and your family from large claims or lawsuits that go above your other insurance policies.  When accidents happen, the dollar amount grows quickly and exponentially.  Imagine having to pay for car replacements, hospitals bills and the ever vague, ‘emotional trauma’.  Before you know it, your initial policy coverage is maxed out and now you owe the balance out of your own pocket.  Unless you have an umbrella policy!

As a general rule, if you have assets in the amount of $500,000 or more, you should have an umbrella policy.  Without it, you set yourself up for financial risk and debt. 

Unless you have been in that situation before, you probably assume that $1 million would be enough coverage for anything that might come your way.  Maybe not.  Here are a few examples of actual accidents (not malicious or intentional):

  • A teenager in Florida drove an ATV unsupervised on his neighbor’s property. He had a serious accident and died. His family sued the neighbors and got $20 million.
  • A 4-year-old suffered a spinal cord injury in a car accident. The family sued the driver and got $29 million.
  • A multi-car accident in California left a 21-year-old in a coma for one month. The driver who caused the accident was sued, and the court awarded the 21-year-old $49 million.

Here are a few reminders of scenarios in which you might want to consider purchasing an umbrella policy:

  • You have vacant land
  • You have recreational vehicles such as boats, ATV’s, etc.
  • You regularly entertain at your home
  • You have ‘attractive nuisances’—an insurance term referring to pools, trampolines, treehouses, etc
  • You drive a luxury car
  • You or a family member shares strong opinions on social media
  • You have rental property
  • You have a public profile or success and/or wealth

What does this umbrella insurance cover?  In general, you have extra protection against the following:

  • Bodily Injury—medical bills or lawsuits that exceed your homeowner’s policy amount.
  • Injury to Reputation—slander, libel, defamation can and does happen easily in today’s social media society and you want to be protected.
  • Property Damage—accidents that exceed your auto policy coverage.  You can even get extra protection for rentals like Jet Ski’s on vacation, etc.
  • Court Costs—if you are unlucky enough to have to engage your umbrella policy, it will even cover your lawyer fees when you have to defend yourself.

And what is not covered?  In general, an umbrella policy cannot be used for the following:

  • Personal Property—if you make damages to your own property, you won’t be covered
  • Criminal Acts—if your action is intentional, don’t expect insurance to help with the consequences.
  • Flood Damage—this is a separate type of policy and should be investigated for your particular needs.
  • Contracted Workers—if you hire a contractor, they should come with their own insurance.  If not, you take a risk that you are liable for their costs in the case of injury.

It’s time to take a serious look at your coverage and determine if an umbrella policy is for you.  Get the coverage you need.  The extra payment you will incur in a yearly premium probably far outweighs the damage that could be done with the alternative.  Don’t put off protecting your assets and your family.  Contact your local agency to get the coverage and peace of mind you need.