Umbrella

By September 14, 2015General

Let’s talk about umbrellas, or as they are more formally known – Personal Catastrophe Liability policies.

An umbrella policy works just like the umbrellas you know – they protect you from the rain.  An umbrella policy can cover your home, auto, boat, and any other personal policies in the event that an accident or something unfortunate happens and you are found to be at fault. There is also such a thing as a Business Catastrophe Liability policy that covers your business.

A normal Personal Catastrophe Liability policy is basically an extra $1 million worth of protection in the event of a lawsuit or settlement.  We all know that lawsuits are becoming more prevalent and courts are awarding bigger and bigger sums with every passing day.  Lawsuits can come from injury or damage caused by, but not limited to: home or auto accidents, pets, children, boats, recreational vehicles, sports, non-profit activities, vacation activities, even social media activity, and the list goes on and on.  If any of these result in injuries, property damage, slander/libel, wrongful death, or legal expenses, you’re likely looking at a larger cost than initially expected.

Erie Insurance has a couple of good cases for us to look at:

  • A jury awarded $900,000 to the estate of a 43-year-old father who died after an automobile accident. The award was based in part on the father’s future earning potential.
  • While helping a friend paint his home, a 40-year-old man fell and broke his heel. Although the homeowner was found only partially responsible, the fall cost him $1.2 million.

In the cases above, these would lie far outside the limits of liability on a normal home and auto policy. Generally speaking, Masters Insurance has been trying to increase limits to $250,000/$500,000 on auto policies. This means if you are in an at-fault accident, insurance will cover up to $250,000 per person and $500,000 per accident. This covers medical bills, lost wages, pain & suffering, etc.  In the first case, insurance would have covered up to the $250,000, you would be responsible for the extra $650,000 that is still owed to the family.

I don’t know about you, but I don’t have an extra million lying around in the event that I am sued. I’m 23 years old and I have an umbrella policy. Mike Masters also carries a Personal Catastrophe Liability policy as well as a Business Catastrophe Liability policy.

Bobbie Sage, a Personal Insurance Expert, believes that every policyholder needs and umbrella. Check out her article below.

http://personalinsure.about.com/cs/umbrella/a/aa110503a.htm

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