After a hectic work week, Jim Marshall was looking forward to a relaxing weekend with his wife and kids. He was just a few blocks from home when his cellphone rang. He glanced down to see who was calling. That split-second distraction was all it took for him to miss the approaching stop sign.
Jim plowed into the side of a passing car. The accident resulted in serious injuries to the driver and passenger of the other vehicle. Jim was sued, found at fault and ordered to pay $1 million for medical expenses, lost wages and the “pain and suffering” of the injured parties.
Although he had auto insurance, his policy had a limit of $300,000. That meant that unless Jim had another way to pay the remaining $700,000, his assets (retirement savings and college funds for his teenage sons) were at risk of being garnished to cover the settlement.
Fortunately, Jim was able to keep his assets because he had a personal umbrella liability insurance policy to cover the remaining balance. Just as an umbrella shields you from the rain, an umbrella insurance policy protects you from a downpour—that worst-case scenario where you could lose everything in a lawsuit.
As another example, in the event that someone is injured on your property and you are found legally responsible, you could be faced with a costly financial burden. Without a personal umbrella liability insurance policy, any expenses beyond the limits of your standard policy are your responsibility. This applies to your homeowners, renters, automobile and watercraft insurance policies. Personal umbrella liability insurance provides an extra layer of protection over your personal assets for when your standard liability coverage is exhausted.
In addition to extending the limits of your auto and homeowners’ policies, umbrella insurance also covers personal injury claims, including false arrest, libel and wrongful eviction, typically excluded by those policies. Dependent teenage drivers on your auto policy are also covered.
Engaging in everyday activities can put you at risk for a lawsuit.
Simple things like having a swimming pool or entertaining guests in your home can increase the chance that someone will get injured and sue you.
Why is a personal umbrella liability policy important?
It works to fill the gaps in your coverage and provides the following benefits:
- When litigation ensues, it’s typically for a large amount. If you get into a car accident and injure several people, you could be sued for millions of dollars; well beyond the limits of your automobile policy. You can also be held responsible if your dog bites someone, if your child injures another kid in a fight at school or if a handyman hurts himself at your home.
- Even if your assets are few, you may have to pay settlements by having your wages garnished, which can go on for up to 10 years, so umbrella insurance can also protect your income.
- Umbrella policies cover legal fees because the insurance company assumes the risk, not you.
- Coverage is inexpensive and easy to obtain. Just give us a call to add it on to your current policy.
- You’ll have peace of mind knowing that you are covered in case of a fluke occurrence.
How much coverage do you need?
Take into consideration your total personal assets and your potential for personal risks when determining how much coverage you need. A wide range of factors, such as whether you have hired help, if you have teen drivers at home or if you operate your business out of your home, will determine how much coverage is appropriate for your circumstances.
What are the policy limits?
A $1 million limit is typical and higher limits are available. Contact us today to determine how much coverage is right for you.
Why put your nest egg, retirement savings and other hard-earned assets at risk? Umbrella insurance is an affordable layer of protection typically starting with $1 million in coverage, with additional coverage available if your financial situation changes.
Information abstracted from Zywave’s “Coverage in Action: Personal Umbrella Liability” and “Know Your Insurance – Protect Against Risks With an Umbrella Policy” articles.