Few things can derail a retirement plan like a liability lawsuit. Accidents on the road and in your home can and probably will happen at some point in time, and when accidents occur they have the potential to put your assets at risk. The base policies on your home and automobile can have gaps in coverage and limits on payments. Supplementing your existing insurance with an umbrella policy may reduce the risk posed to your assets during a lawsuit.
If you are found to be legally responsible for injuring someone or damaging their property without a personal umbrella liability insurance policy in place, anything beyond the limits of your standard liability insurance coverage will have to come out of your own pocket, including attorney fees and court costs. Standard liability insurance generally includes homeowners, renters, automobile and watercraft policies. It’s not uncommon for jury awards and out-of-court settlements to run into the millions, and if you don’t have that kind of cash on hand your assets can be legally seized and future earnings can also be garnished.
How Much Coverage is Needed?
There are close to six-million car accidents each year causing 30,000 fatalities, so it is no surprise that 75% of personal umbrella claims are auto-related. Another large percentage of claims come from issues inside one’s home or property when visitors are hurt during a social gathering. A deck collapse during a social gathering, food poisoning, even a family pet defending its family. In fact, 40% of American households own a dog, and five million people suffer from dog bites each year.1
Even doctors that rent need high liability coverage. A candlelight dinner can quickly turn into tragedy if it creates a multi-unit fire. Your hobbies could also put you at potential risk. Do you enjoy golf? If your golf ball goes astray and strikes somebody in the head, that can fall back under the coverage of your home or renters “Personal Liability” coverage.
Last Line of Defense
For high-value households, high liability coverage is essential. “Umbrella” coverage, and its less comprehensive cousin, the “Excess Liability Policy” are some of the least known and most underused types of insurance. Liability policies will not only pay the monetary damage costs, but often, just as important, the attorney fees and other court costs. Better yet, a $1 million umbrella policy typically costs about a dollar per day.
Consult with your property and casualty agent with regards to your particular situation and state laws. Be proactive with your asset protection coverage, because you never know when that next rainy day is around the corner.
- Jacquelyn Connelly, “Top 3 Ways to Sell a Personal Umbrella.” Independent Insurance Agents and Brokers of America, Inc, (September 2015). http://www.iamagazine.com/markets/read/2015/09/14/top-3-ways-to-sell-a-personal-umbrella
Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Insurance services offered through Larson Financial Group, LLC, an insurance agency.