Personal Umbrella Policies: You Don’t Have to Be Worth a Million - To Be Sued for a Million

People aren't perfect and mistakes happen. But what happens when a mistake ends up costing you more than the maximum of your personal liability coverage? Sound far fetched? Actually...it can happen easier than you think. A slip down the stairs, a car accident in the rain, a mis-placed dive into a swimming pool...no one ever thinks it will, but when it does...the costs can add up quickly. In today’s world, by the time your general liability covers medical expenses and replacement costs, it can easily add up to more than your coverage amount. What happens then?

To prevent mistakes from costing you literally everything, that’s where umbrella insurance comes in. Umbrella insurance isn’t something to ignore and it isn’t a luxury...it is, however, a necessity if you want to protect your assets from costly unforeseen consequences. You don’t have to be worth a million dollars to be sued for a million dollars. 

Umbrella insurance is what pays out liability claims when you owe for damages greater than your auto, commercial vehicle, homeowner's, or commercial liability insurance allows. For the value it provides, it’s an inexpensive way to protect your assets in the event of an unforeseen accident.

Here's an example of how umbrella insurance works:

Let's say you carry $250,000 of liability insurance on your car, and  you have a $1,000,000 limit, per occurrence umbrella insurance policy. Then let's suppose you cause a car accident and the passengers of the other car are injured. The combination of their treatment, hospital stay, rehab, missed work, pain and suffering and legal fees  can easily add up to more than $250,000 in expenses. Your umbrella policy would then step up to the plate and make sure those costs that exceed your auto liability coverage are covered up to your $1,000,000 umbrella insurance limit. Without it, any of these expenses that exceed your $250,000 auto liability will have to be paid out of pocket.. 

When a lawsuit is involved, it’s customary for a lawyer to consider your insurance coverage when determining the dollar amount in the suit. If you have enough assets, but not enough coverage, lawyers can come after you personally. 

Pricewise, we find that umbrella insurance is relatively inexpensive to purchase when you consider what it covers. It provides that protective layer on top of your underlying liability so that when a claim exceeds your  coverage and “pierces the umbrella” - it’s there to cover you when you need it.

What does umbrella insurance cover?

Umbrella insurance covers claims against you or other members of your household when:

• You cause personal injury to others.
• You cause damage to other people's property.
• Family members cause personal injury to others or damage other people’s property.

Your umbrella insurance policy typically covers claims against you for damages and the cost of legal representation.

Umbrella insurance is a really good idea. When you consider how cheap it is compared to what it can do for you, it’s almost a no-brainer.

Do I Really Need Umbrella Insurance? 

You may think you don’t...and we understand not wanting to think that anything could ever happen on your watch...but what if it does? We’ve put together a quick list of situation descriptions to help you understand if umbrella insurance is right for you: 

• You have teenagers.
• You have adult children in your home who use your stuff and who act like teenagers.
• You are a well-known figure in your community.
• You have lots of money...or people think you have lots of money.
• You coach kids.
• Your beloved pet decides to take a disliking to your neighbor.
• You host lots of parties at your house.
• You are a landlord.
• You own things that can cause injury to others, like exotic animals, non-so-exotic animals that have a bad temper, fast cars, guns, a trampoline, or a swimming pool.
• You want to make sure that a liability claim doesn't wipe you out financially.
• You drive a car, or truck, or motorcycle.

Winter-Dent can go over all of your potential liabilities and help match you with the umbrella policy you need. No one likes to think of ever needing umbrella insurance, but the only thing worse than buying it and not needing it...is needing it and not having it.