The Personal Umbrella Policy
What is a Personal Umbrella Policy?
In the event that you are ever sued, your homeowners or auto policy will provide you with some liability coverage, paying for judgements against you and your attorney's fees, up to a limit set in the policy. However, in our litigious society, an extra layer of liability protection gives you the peace of mind that your assets are protected. That's what a personal umbrella liability policy provides.
An umbrella policy kicks in when you reach the limit on the underlying liability coverage in a homeowners, auto or boat policy. It will also cover you for things such as libel and slander.
For about $150 to $200 per year you can buy a $1 million personal umbrella liability policy. Additional limits of liability are available in million dollar increments up to $10 Million.
Do I Really Need One?
rIn the event that you are sued all your personal assets are at risk. Your savings, real estate, retirement accounts, and wages are all fair game. As a general rule of thumb, the Personal Umbrella is a must for homeowners. However, there are additional risk factors that should also be considered. Do you have teenage children…do they drive? Do you have a pool? Do you own rental property? Are you perceived to have wealth based on where you live or your profession?
In addition to these additional risk factors, you should also be aware that the number of lawsuits increases during times of economic hardship and recession.
How Much is Enough?
The more you have, the more protection you need. As your earning power and assets increase, your limits of liability should be adjusted accordingly. You should also take into consideration the risk factors mentioned above. Often times the perception of wealth increases the chance of a lawsuit. Do you live in an affluent town? Are you a doctor, lawyer or business owner?
Real Life Examples
A driver loses control of their vehicle on black ice and causes a three-car accident. A total of four people are injured in the accident. One of the injured is permanently disabled. Lawsuits totaled $5M.
A jogger slips and falls on a snow-covered sidewalk in a residential neighborhood. The injured party sues the homeowner for failure to maintain the sidewalk. The judge awards $650,000.
A California teen posts remarks about a classmate on Facebook that are malicious and not true. The classmate files a $1 Million dollar slander suit against the teen and the parents.