Umbrella or Excess Liability Insurance 101
Cindy Holland 916-919-3005
Why would I need an Umbrella Policy?
Every day the newspaper has stories about lawsuits filed for every possible reason. They range from serious injuries resulting from tragic accidents to seemingly silly disputes. If the day comes when you're served with legal papers, it's imperative that you have insurance to cover your legal liability.
Umbrella policies provide an extra layer of protection. |
That's where a personal liability umbrella policy can help you. Umbrella policies supplement the liability coverage you already have through your home and auto insurance and provide an extra layer of protection. Umbrella policies aren't just for the wealthy - they're for anyone who has assets that might be at risk if they are responsible for a serious accident.
If you don't have enough liability coverage to resolve a claim or a lawsuit, the person bringing the action might go after your home or your other assets to pay for damage. Umbrella policies cover damage claims that you, your dependents, or even your pets may cause.
How it works
Umbrella policies kick in after the liability insurance in your homeowners and auto policy runs out. For example, if you have a home insurance policy with liability coverage of $300,000, the umbrella policy will pay claims above that amount up to the limit selected. Or if your liability limit on your auto insurance policy is $250,000 of bodily injury protection per person and $500,000 per accident, your umbrella coverage would kick in after you have exhausted your auto liability coverage.
Because most of the risk is assumed under the primary auto or home policy, personal liability umbrellas are relatively inexpensive. You can buy a $1 million or larger umbrella policy approximately $200-$300 a year.
More than your average liability coverage
When you buy a personal liability umbrella policy, you're getting more than just higher liability limits. You're also buying broader coverage in case you're sued. The insurer selling the umbrella policy agrees to cover you if you cause bodily injury, property damage, or personal injury.
The Umbrella or ‘personal injury protection', offers coverage not found in your auto and homeowners policy without an extra endorsement. Generally, personal injury encompasses false arrest, false imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction. Most primary policies cover bodily injury and property damage, but not personal injury. Certain umbrella policies also provide coverage if you face liability arising from your service on the board of a civic, charitable, or religious organization.
Protection against claims and lawsuits does more than simply pay for the damages. Even if a lawsuit is frivolous, you still face the expense of defending yourself. Your liability coverage pays for lawyer fees and defense costs, which can quickly add up.
What is my net worth?
As with any type of insurance, you don't want to buy unnecessary coverage. Start by analyzing your chance of being sued and the assets you have at risk. Determine your ‘ net worth ‘. The value of all of your assets. This is what you have to lose, or most commonly referred to as your ‘ exposure ‘. This is the sum total of what is available to lose in the event of a lawsuit, and you are not adequately Insured.
Perhaps your family has a swimming pool, trampoline, or swing in the backyard that pose a danger. If you have visitors to your property, there's a risk of accidental falls. Maybe you're a golfer who narrowly misses hitting someone during every round. Or consider the potential pay out if you are the third car, causing a 3 car collision?
While these situations are hypothetical, we all know them to be real life. Why not protect what you have worked hard to attain? An Umbrella or Excess Liability Policy is the intelligent protection solution. At Costello and Sons we ‘ always ‘ recommend an Umbrella Policy for our affluent clients. We work for you. "We cover your assets, the right way the first time".
Costello & Sons Cindy Holland PH 916-858-3704 Cell 916-919-3005 cholland@costelloandsons.com
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