We live in a society that lawsuits are becoming commonplace. Most people are unprepared for those consequences. That’s why its good to have an umbrella policy; because just one event can change the course of your life. It offers protection for a worst-case scenario.
Getting an umbrella policy is a great way to protect yourself and your family, it does this by providing an extra layer of liability coverage. An Umbrella policy provides an extra layer of protection by extending the limits of your primary auto, home or boat policies. All at an affordable price of $20-$50 a month.
What Is Personal Umbrella Insurance Policy?
Practically speaking umbrella policy is protection for a worst-case scenario. It is additional coverage on the top of your home, condo, coop, rental unit or auto liability limits.
The coverage limit increments start at $1,000,000 and go up. This coverage kicks in after a claim has reached the liability coverage limit on your underlying policy responds to any personal lawsuit. The company would respond by first defending the lawsuit and then paying out up to the face amount on the policy if there is a judgment against you or anyone in your family.
The coverage ‘stacks’ with the limits on your homeowners or auto liability. ie $500,000+$1,000,000= $1,500,000
For Example: If you have an Auto policy with a liability limit of $500,000 and an additional $1,000,000 umbrella the total coverage that you have regarding an auto accident is $1,500,000.
According to Trusted Choice, these are some data on average costs of claims:
The average cost of a slip-and-fall accident claim is $23,000
The average dog bite liability claim is nearly $30,000
Fire damage claims in apartment buildings where more than one unit is damaged typically exceed $100,000
If if they are accidental, fires have the potential to bring extremely high liability costs. If you live in a condo or coop building, a fire can destroy your property and the property of those around you. Even in single-family homes, neighboring houses are sometimes damaged during a fire. Having an umbrella policy in place will ensure that you can pay your court, attorney and liability costs.
Is Personal Umbrella policy Expensive?
An umbrella policy is surprisingly affordable with $1 million in coverage costing about $200 to $400 per year (depending on a variety of factors). For less than the cost of a cup of coffee each day, Umbrella Insurance gives you good value for the cost.
An umbrella policy picks up where your auto and homeowners insurance policies leave off. It has a high deductible because the deductible is designed to be met by your other policies. Expect to pay around a few hundred dollars a year for this coverage.
Here are some factors that could affect the amount you pay:
Your Driving Record
Who Needs Umbrella Insurance
Since the whole point of umbrella insurance is to protect your assets from a lawsuit, you should buy it to protect both your current assets, earnings and your future earnings.
‘I have no assets besides my home and retirement, do I really need a personal umbrella policy?’
The short answer is, if you own a home- you should get a personal umbrella policy!
Even if you don’t own a home- life can change in an instant, and most of the time it’s not gross negligence that leads to an umbrella policy paying a claim.
Well I am a safe driver.
There have been multiple pedestrians hit by cars in the Rivertowns in the last few years. Usually, excessive speed wasn’t involved. Possibly the driver and pedestrian were distracted. Sadly, many of the pedestrian were seriously injured and some died from injuries resulting from being hit by a vehicle. With more people home, walking and playing in the streets- now more than ever- an umbrella liability policy is good to have.
5 Actual Claims On A Personal Umbrella Policy
An insured’s daughter hated math class as well as the teacher. The daughter made several “disparaging” and false remarks about her teacher online. The teacher sued the parents for personal injury and $750,000 was paid.
The insured’s 18 year old son was driving the insured’s car on a short trip to the store with his girlfriend. He lost control of the car and struck a tree. The insured’s son told the police that a vehicle cut him off, but there were no witnesses and no evidence of any impact with another car. His girlfriend, a 19 year old college student, was hospitalized for over a month with multiple fractures and internal injuries. She was in a wheelchair but is now able to walk with crutches and continues with physical therapy. She has a right drop foot as a result of the injuries. The insured’s personal umbrella policy limit was paid.
A 28-year old engineer dove into a friend’s above ground swimming pool struck his head on the bottom and, as a result became a quadriplegic. He sued both the homeowner and the pool manufacturer. The court found the homeowner to be 60 percent responsible and the pool manufacturer to be 40 percent responsible, and awarded $10,000,000.
A hillside on the insured’s property was covered with concrete to prevent erosion. The concrete had been installed before the insured purchased the property. Approximately 5 feet of the concrete fell to the neighboring property knocking the claimant’s home from its foundation. The resulting claim was settled for $970,000.
The insured permitted several of her children and their friends to play paintball in her large backyard. The children were experienced and advised of all the safety rules including the use of headgear at all times. A participant removed her headgear as she was leaving the field in order to better hear someone calling her name. The minor claimant was hit in the eye resulting in a $475,000 settlement.
What Umbrella Insurance Doesn’t Cover
Although umbrella insurance protects you against most types of personal lawsuits, there are certain kinds that many policies specifically exclude. For example,many umbrella policies do not cover:
Workers compensation claims against employers
Damage caused by a business, or by any business-related activity
Damage that you cause intentionally to any person or property
Also, it’s important to note that umbrella insurance only protects you from being sued for damage to other people. If you’re the one who gets hurt and needs an expensive operation, it’s up to your health insurer to pay for it – and anything the health insurance doesn’t cover still comes out of your pocket. In that case, an umbrella insurance policy can’t help you.
For less than the cost of a cup of coffee a day, most people can purchase a Personal Umbrella Policy with a limit of $1,000,000 possibly $2,000,000 or even $10,000,000.+
Looking to speak to an insurance professional? We can help you to find the right blend of price, coverage, and providing you the best coverage to fit your risk management needs. Call us at (914) 269-2334.