We all know that we live in a litigious society. Every day we are bombarded with advertisements from attorneys stating that they will help you with your claim and get you the payout you deserve. How do you protect your family and assests that have taken you a lifetime to build? For starters, you have auto and home insurance, but they are limited in the amount of liability protection they provide. The answer to having higher limits is the personal umbrella policy.
What Is A Personal Umbrella Policy?
A personal umbrella policy is an insurance policy with high liability limits designed to provide protection over other insurance policies like a homeowners and personal auto. A personal umbrella policy can provide coverage in excess of other policies limits, and is some cases if coverage is excluded on other policies the umbrella will “drop down” to cover the loss.
Who Needs A Personal Umbrella Policy?
Anyone who wants to protect their personal assets is a candidate for an umbrella policy. With the costs of lawsuits increasing, individuals need to protect their families as best they can. An umbrella is a perfect way to preserve current assets as well as future earnings so you can maintain your livelihood and lifestyle in the event you have a loss and are sued. Consider the following statements to determine if you’re a good candidate for an umbrella policy:
You own a home You own a recreational vehicle You have significant assets
You have children You own a swimming pool You own a dog
You own a boat You provide alcohol to guests You own a motorcycle
You own a car You have playground equipment You own a business
While walking your dog, he gets excited by another pedestrian on the sidewalk and jumps up, causing the pedestrian to fall. When the pedestrian lands on the concrete, they crack a vertebrea that requires surgery, physical therapy, and several months off work. They sure for hospital costs, lost wages and pain & suffering and win a judgement of $600,000. The primary liability from the home policy only covered $300,000 leaving the dog owner responsible for the additional $300,000.
While boating with friends, a passenger falls out of the ski boat and gets wrapped in a ski rope cuasing severe injury to their leg. They sue for higher limits than provided by the boat policy, and win a judgement of $250,000 beyond the policy limits.
While mergin on to a busy highway, you cause a semi truck to overturn in the median. While the driver is okay, the cargo valued at $750,000 is damaged and cannot be repaired. You are now responsible for the damages to the truck and cargo. Your personal auto policy has limits of $100,000 for property damage leaving you on the hook for the remaining $650,000 damage to the cargo and the damages for the truck.
How Much Does It Cost?
The cost of the personal umbrella policy is usually fairly low. On average a annual policy will run between $150-$300. The premium is calculated by looking at how many homes, autos, boats, motorcycles, and young drivers are in the home. Coverage starts with an additional layer of $1 million and goes up from there depending on your needs.