Who Needs an Umbrella Policy?
by Chad Yoder, Personal Lines Manager

Let’s face it, we all make mistakes or have accidents, we are only human. Society has become accustomed to exploiting our mistakes, allowing some to sue for amounts far beyond what would be considered reasonable. To some, it’s viewed as a lottery ticket, but what about those who are seriously injured? My point is not to justify or condemn those who sue, but to say that lawsuits are a very real part of today’s society, and we are all susceptible to the devastating effects of being sued. For example:

• Your child loses control of their car and has a head on collision, seriously injuring the occupants of the other vehicle.
• A child is injured and paralyzed while swimming at your house.
• Your tenant falls down steps and is injured because of a loose handrail.
• A visitor slips and falls on your icy driveway.
• While walking your dog at the park, the dog bites a child, puncturing the skin.

An umbrella policy simply adds an additional layer of liability protection to an existing personal insurance account. Although everyone should consider an umbrella policy, you should especially consider purchasing one if you:

• Have assets that exceed your primary liability protection
• Are nearing retirement or have already retired
• Hold an executive position or are in a target occupation
• Own a business
• Own rental or vacation properties
• Have a swimming pool or pond
• Have young drivers

Umbrella Policies Cover Where Others Stop
An umbrella policy may also fill in gaps where the underlying policy may not provide coverage. For example, while on vacation in Mexico, you rent a car, but decline the rental company insurance, assuming that your personal auto policy will provide coverage. However, your auto policy excludes coverage outside the US or Canada. If you had an accident and were sued, the auto policy would decline coverage, but your umbrella policy would respond to the lawsuit.

Although the likelihood of being sued is still very low, an umbrella policy provides very inexpensive peace of mind. Sold in million dollar increments, an average umbrella policy costs as little as $150-$200 a year. If the cost is hindering you from purchasing this important insurance protection, consider taking higher deductibles on your primary policies. A higher deductible will lower the premiums on these polices and help to offset the cost of an umbrella. Which is worse, paying an extra $250-$500 out of pocket on a property claim or paying $100,000 or more out of pocket because of a lawsuit settlement?

An umbrella is an especially important part of the estate planning process. Please call us at 267-384-5300 for more information about umbrella policies, or ask your financial planner if an umbrella policy is right for you.

FIFS Connection, Summer 2006, Vol.3, No. 3