Umbrella Insurance

Umbrella Insurance


People buy insurance to recover quickly from unexpected tragedy. Most people I know don't have millions setting in an account to be used to settle a jury award. We buy a liability policy to transfer at least some of that risk to an insurance company.

Accidents happen; it is part of life. Unfortunately, lawsuits will be a consequence whenever the accident is severe enough to cause bodily injury or property damage. I advise my clients to think of liability insurance as an "if I am sued" coverage.

Worry, regret, and possibly guilt are just a few of the emotions that come to mind. Liability coverage with a reliable insurance company will provide at least some relief to the anxiety. Your insurance carrier has a duty to defend you, even if the claim is bogus. And should you be found liable, they will pay damages on your behalf up to the limit you have chosen (as long as the occurrence is not excluded, and happened within the policy period).    

The question becomes, how do you choose a limit for liability insurance?  Making that determination is difficult for obvious reasons. It is impossible to predict the severity of the incident, or the amount of the damage award. However, a good starting point would be to think about the value of your assets and what you could potentially lose. Choose a limit of liability that will shield those assets that you have worked so hard to obtain.

Purchasing an umbrella policy is also an essential method of shielding your assets. When you face a serious liability issue, an umbrella policy can feel like your rich uncle coming to protect you. He says, “bring it on. I don't care if you are sued because of an auto accident, a general liability claim, or an employer's liability claim. If your claim reaches a level beyond your liability limit for the underlying policies, I've got you covered.” You can visualize it this way:

                             UMBRELLA $2,000,000     

Auto Liability     General Liability     Employers Liability

  $500,000          $1,000,000       $500,000

An umbrella policy is an excellent method of minimizing your risk, for both personal and business liability. The cost is very reasonable because it is only used in the worst of circumstances. It is important that the underlying coverage meets the required limits to avoid a potential gap in coverage. If you would like more information or an insurance review, please let me know.