How an umbrella policy can protect you from the unexpected.
No one ever
plans to get sued, but accidents happen and things go wrong all the time. In
today’s litigious society, a slip, a crash or even a careless comment may lead
to a personal liability lawsuit, targeting you for medical expenses, legal fees
and damages. Most auto and homeowner’s policies include some personal liability coverage; but the costs associated
with a lawsuit can quickly exceed that amount. When that happens, your home,
savings and assets are fair game and could be seized.
You can
protect yourself against liability lawsuits—and financial ruin—by adding
umbrella insurance to your existing insurance policy. Umbrella insurance is additional
personal liability coverage that can protect you and your assets if you are
ever sued. It provides an extra layer of protection, along with peace of mind.
How does umbrella insurance work?
Umbrella
insurance, sometimes referred to as a personal excess liability policy, is designed
to protect you from major claims and lawsuits. Umbrella insurance kicks in when
you reach the limit on the liability coverage in your homeowner’s, renter’s or
auto policy. It covers you if you are sued and need to pay legal fees, or if
you are found liable and need to pay damages of any kind.
Umbrella
policies vary, but generally include:
- Bodily injury coverage, which provides
coverage for claims or lawsuits arising out of an injury that is determined to
be your responsibility.
- Property damage coverage, which covers
you if you are at fault for any damage to another person’s property, including
their home or vehicle.
- Medical payments for medical costs
(ambulance, emergency room fees or doctor visits) not covered by other
insurance.
Because
umbrella insurance goes into effect only after underlying coverage is exhausted,
you may be required to carry a certain amount of underlying coverage before you
can purchase additional umbrella coverage; this could be as much as $250,000 liability
coverage on your primary homeowner’s policy.
Who needs umbrella insurance?
You might
consider umbrella insurance if you:
- Have a swimming pool. Each year,
nearly 4,000 Americans die from drowning, according to the Centers for Disease
Control. Children four years and younger have the highest drowning rates, and
most of these children drown in swimming pools. Swimming pools present a
serious liability risk, and your homeowner’s insurance alone will likely not be
enough to protect you in the event of a lawsuit resulting from a drowning.
- Own a dog. Dog bites and other
dog-related injuries accounted for more than one-third of all homeowners
insurance liability claim dollars paid out in 2014, according to the Insurance
Information Institute. Most homeowner’s and renter’s insurance policies offer
basic coverage for dog bites, with coverage amounts commonly ranging from
$100,000 to $300,000. That might seem
sufficient, but the cost of a dog-bite lawsuit can quickly escalate far beyond
the scope of an average policy.
- Have snowmobiles or ATVs. ATVs, in
particular, are associated with a high risk of injury. Even if you only let
family and friends ride your vehicle, you are at risk of being sued if someone
is injured or causes damage to someone else’s property.
- Serve as voluntary board member. Even when are doing good, you are at risk for being sued. Volunteer
board members can be held liable for the actions (or inaction) of the
not-for-profit organizations they serve. Your personal insurance is typically
not enough to shield you from executive risks. If you join an organization that
is unincorporated or are unsure about its level of coverage, you may need to
seek an additional policy. See HUB Professional Liability white paper.
- Are a blogger or frequently write online reviews. Bloggers and online reviewers are increasingly being sued for
defamation. Unfortunately, homeowner’s and renters insurance does not cover
libel (written or published defamation) or slander (spoken defamation). If you
blog or frequently post comments or reviews, umbrella coverage can protect you
should your words cause offense.
- Are recently retired or living on a fixed income. You’ve worked hard and now may have a comfortable, but limited
amount of resources. One major claim could deplete everything, and throw your retirement
and future into uncertainty.
How to buy umbrella insurance
If you want to insulate
yourself from lawsuits and protect your home, savings and future, talk to your
HUB representative about purchasing
umbrella insurance. You can buy umbrella insurance ranging from $1 million to
$10 million (and beyond) for a modest monthly fee, which may be a small price
to pay for the rainy day security it can provide.