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Umbrella Coverage: Why YOU Need it!

An Umbrella policy provides additional liability coverage over the limits on your other insurance policies (home, auto, boat...etc.). Legal liability is created when you or a family member do something that injures or damages another person or their property. Many people assume they are not wealthy enough to need one or do not have enough assets to warrant an Umbrella policy. The truth is you need one if you have a job, or a minor in the household or if you simply have assets of value. Not only is it important to have an Umbrella policy, but it is equally important that the policy limits are adequate!

When you are sued, you have to defend yourself and you are responsible for paying any judgment against you. If the judgment awarded against you exceeds your coverage limits, most of your assets are at risk, which can include your home, auto, bank account, some retirement accounts, future wages and any other owned assets of value.

It only takes one innocent mistake, one misstep, one glance away, one accident to end up in this kind of situation. Below are real life examples of claims, demonstrating inadequate coverage. Some of them only provide THE JUDGMENT, not necessarily the amount that the Umbrella paid out. Too often we see people with too low of limits:

  • Teenage driver heading down the highway met an oncoming semi-truck, which crossed the center-line. The teenager was killed. The semi-truck driver was sued personally as well as his trucking business. The judgment exceeded his liability limits on the truck as well as the $1M umbrella policy.
  • A newly retired couple who owned real estate, had a good savings and retirement account, caused a car accident with severe bodily injury. They did NOT have a personal Umbrella. The judgment was over $500K. The retired couple ended up losing their home, all the money in the bank and most of their retirement money they worked long and hard for.
  • An insureds daughter hated math class and the teacher. She made several disparaging and false remarks about the teacher online. The teacher sued the parents for personal injury and $750,000 was paid out on a $1M Umbrella.
  • A driver who did NOT have an Umbrella policy, hit a policeman who was completing paperwork at a traffic stop. The driver had to pay legal fees for his defense as well as pay out of pocket for the settlement.
  • A group of friends were playing airsoft in an insureds backyard, one of the girlfriends refused to wear the protective gear. She ended up being hit in the mouth and chipping her tooth. The girls parents sued the insured for permanent damage to her face and mouth. The $1 Million Umbrella carrier was put on notice. The judgment is still pending.
  • A 40-year-old window washer broke his heel in a fall after a downspout he was holding onto broke away from the house on which he was working. Although the worker was found partially responsible, the fall cost the homeowner $1.2 million. On this policy, the homeowners policy paid the first $300K and then the Umbrella paid the remaining $900K.

Remember: Even if the lawsuit against you is judged to be without merit, it still can cost you money to defend the lawsuit. You need to be adequately insured and an adequate Umbrella policy does just that.

Not everyone needs the same limits either, that is why we recommend you give us a call for a comprehensive risk review even if you have some insurance policies elsewhere!

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