Many individuals have potential liability based on the fact that they have assets. With today’s society being quite litigious, it is important to protect your assets as much as possible, and an umbrella policy will certainly help to limit the liability you may have, since the insurance company would take the risk.
This is an additional policy over and above your homeowner’s insurance and car insurance liability policies. Many companies have requirements for higher limits or lower deductibles on their automobile policy before the insurance company will write the umbrella policy.
Here’s an example of how it may protect your family. Let’s say that a family has a $300,000 liability policy on their homeowner’s policy with a $1,000,000 umbrella policy. If a child is injured on their property and a $1,000,000 judgment is entered against them, their homeowner’s policy will pay $300,000, and the umbrella policy carrier will pay $700,000. However, many companies insist that they have the ability to be the insurance company for both policies so that they may control the coverage and potential defense.
Umbrella policies are relatively inexpensive and may be no more than a couple hundred dollars a year. But if you have significant assets, you may wish to purchase an umbrella policy with greater than the $1,000,000 of coverage to cover potential risk and liability.
It is important to be sure that your insurance agent is aware of all potential risks so he may assess the situation to verify that the policy will cover risks which such as bodily injury, mental anguish, wrongful eviction, invasion of privacy, etc. It is also important to make sure that the company and agent are aware of all issues, such as children in the household who may have cars and are driving your name or under their own name alone.
Due to some policy exclusions and the possibility of the company alleging that it will not pay for a claim when it is filed, it is important to review the exclusions of the coverage so that the insurance is available when you need it. It’s a good idea to have an annual review of all policies to verify you have all the coverage you need.
By: Hyman G. Darling, Esq.
Comments