Do You Have Umbrella Insurance? Do You Need It?

Let us start with a dramatic illustration. You are driving and suddenly a pedestrian lunges in front of you. You do not stop in time and hit him.
After getting over the shock, you thank your lucky angel because you are fully covered by an automobile insurance policy. It even covers medical liability. You feel relieved.
Unfortunately, your relief could be temporary. Most automobile policies have limited coverages. They will not cover you in case you are sued by the victim for negligence.
Let us take something less dramatic. There is a heavy storm and the tree in your property splits and falls on your neighbor's garage, crushing his car and other property kept in the garage. Does your home insurance policy cover such a damage? Most probably not.
That is why, while it is important to have your assets such as home and car covered through specific damage policies (fire, accident, theft, storm, uninsured motorist etc.), it is absolutely crucial to have an umbrella insurance policy as an essential part of your overall protection.
Briefly, an umbrella insurance policy covers you from unspecified damages caused by liability arising from a lawsuit. Do not mistake it as a supplement or extension of your other insurance policies. It does not cover your deductible or co-pay liability. It simply kicks in and covers you when you are sued.
Why is it important? If you or your immediately family with whom you have co-ownership have assets worth protecting, there is no other way to protect them in the case of civil or criminal litigation exposure. Such litigation, if it is adjudicated against you can play havoc with not only your peace of mind but also with your livelihood. Here is how:

1. Your assets can be attached by court in settlement of the award
2. You could lose rights to income from the attached assets
3. You may have to pay legal expenses defending the lawsuit
4. You do not have anyone professionally looking into settlement options, other than your attorney who again costs you money

An Umbrella policy in fact provides an added layer of liability coverage above and beyond the limitations of specific asset protection policies such as homeowner's, auto, personal property and boat. This policy is also used when you are sued for something which is not normally included in traditional insurance policies.
Such policies are relatively cheap, again depending upon your claims history. A $1 million policy will probably cost you between $200-$400 annually. However, most insurance companies will not sell you one unless you have adequate coverage for your high value possessions--mainly home and car.
Another use of the umbrella policy is if you are holding a board position with a business entity. Such policies are usually referred to as Directors' and Officers' (D & O) policies and you may be able to get them cheaper if you persuade the company itself to go for group coverage.

Umbrella Insurance - Do's and Don'ts

A friend once asked me why would one be so foolish as to spend money on an umbrella insurance policy. I told him one would be foolish not to. This surprised him. Truth is, it is not surprising that most people never consider buying umbrella insurance and are content with single asset policies like home, auto and art.
So what is an Umbrella insurance policy?
An umbrella insurance policy is simply a policy that overlays on top of all other single asset insurance coverages you have. It is usually in $1 million increments. It can pay for any medical, litigation and malfeasance claims you may be required either by law or contract to pay.
Individuals who need umbrella insurance generally meet most of the following criteria.
Level of risk for yourself or your assets.
Are you in a profession that is vulnerable to excessive litigation--e.g. are you a doctor, emergency care giver, physio-therapist, psychologist? Then you definitely need one.
Do you have assets to protect?
Generally people with tangible assets (home, valuables) in excess of $1 million need such a protection.
Do you have a history of claims settlement?
If you or your liability insurance company has been prone to settle litigation, you definitely need one. The next litigant may not be in a mood to settle and may force a trial.
Shopping Tips for Buying Umbrella Insurance:
Comparison Shop: Go to a site like Cheapinsurance or Esurance. You can put in the information asked for and Most insurance companies require policyholders to have their car and home insurance with them in order to get umbrella coverage. A policyholder can save around 20% on premiums by sticking with one company for both basic policies. The National Association of Realtors' estimator helps homeowners determine how much coverage they'll need.
Include all of the assets: People sometimes forget they may have a partial ownership (e.g. fractional ownership of a boat or plane)
Do it right the first time: It is expensive and can affect your credit if you let insurance companies keep checking your credit because you are writing, canceling and re-writing policies. So shop till you drop but do not make a decision to buy any insurance till you are sure and have compared all aspects of the policy and issuer.
Be conservative: When insuring for umbrella protection, while going overboard relative to coverage is not advised, skimping is even more dangerous so get the facts behind what you intend to cover.

Why Everyone Needs an Umbrella Liability Policy

You've carefully chosen the coverage levels on your home and auto policies so you should be protected against every possible risk correct? Unfortunately not. Your existing auto and homeowners insurance may not be enough to protect your nest egg in the event of an expensive lawsuit.
Are you at risk? Recent statistics show that $500,000 is the national average for payouts in an auto liability case and $900,000 is the average for a property liability case*. In addition, 25% of all $1,000,000 or higher payouts are in the State of California (yes, we are a lawsuit-happy state). Even if you are ultimately deemed to not be at fault, chances are you will incur a large attorney bill just defending yourself.
Here's an example - let's say you, or someone in your household, is involved in a car accident. You are determined to be at fault and the person you injured sues you. We'll assume you carry $100,000 in bodily injury protection on your auto policy, however, you are ordered by the court to pay $500,000 to the injured party. Your auto policy will pay the first $100,000 but where does the additional $400,000 come from? Your home, any other real estate holdings, your vehicles, other personal property, your savings, investments and other liquid assets might all need to be liquidated in order to satisfy the court judgement.
What if you have no assets and your net worth isn't enough to cover the judgment against you, do you still need insurance? YES because 25% of your future earnings could also be at risk and be garnished under court order.
Have young drivers in the house? Not only are they more at risk for an accident but 25% of their future earnings could also be garnished if they are deemed to be at fault in an accident. Not to mention that YOUR assets are at risk.
An umbrella liability policy offers an additional layer of protection over and above your auto, homeowners, condo or renters policies so you are protected both at home and in your vehicle. You work hard for everything you have so why wouldn't you want to protect that nest egg?
Umbrella Liability policies usually range from $1,000,000 to $5,000,000 in coverage and are fairly inexpensive (a couple of hundred dollars per year on average for a $1,000,000 policy). Re-evaluating your existing policies, getting all the discounts you're entitled to or raising your deductibles slightly can very often cover the added cost and is well worth it.
Simply put, not having an umbrella policy is like jumping out of an airplane without a parachute. Why risk everything you've worked your whole life to build? Once you have an umbrella policy, you will wonder how you ever lived without one.

Critical Coverage

READ THIS REPORT BEFORE YOU DECIDE ON YOUR COVERAGE LIMITS!
Critical Coverage EVERY Family Should Have for Teen Drivers
Protect Your Family's Financial Future NOW!
There are probably all kinds of thoughts going through your mind during this period of parenthood. Your innocent young child has reached a milestone in life that brings a new freedom they have never experienced before.
Your child's dependence on you has just been reduced tremendously. You can only hope that all your guidance will be enough to help him or her go out into the world responsibly and remain safe.
There is one more responsibility you have that cannot be taken lightly. Your Family's entire future depends on how you protect it. More specifically, your family's "Financial Future" must be protected and you are about to learn how to do it- and do it right.
Teen Drivers are 5 times more likely to get into a car accident than an experienced driver and an accident from a Teen Driver cost insurance companies 3 times more than an experienced driver.
That means- now that you have a young, inexperienced driver in your household, the likelihood of you being involved in a lawsuit has just skyrocketed.
In my community, almost every Monday morning when I read the newspaper, there is a story about a teenager getting killed in an accident or killing someone else. At the time I am writing this report, there were 2 such stories of teen-related fatal accidents in my paper this morning.
The first accident involved an 18 year old that was beginning his senior year. He was a junior firefighter who was just promoted to the team at his 18th birthday just a month ago. He was speeding (65 in a 45), lost control of his car, went into a ditch, rolled his car and was killed instantly. (By the way, he wasn't wearing his seatbelt.)
As tragic as this story is, the only blessing was no one else was involved. No one else was killed or injured and there won't be a lawsuit.
The second story involved three teenagers out having a good time Saturday night. The 18 year driver had been drinking and using a prescription drug called "Xanax". He lost control of the car and ran off the road into an embankment. His 18 year old girlfriend was killed. Her younger sister and the driver survived the accident with minor injuries.
He was charged with DWI, reckless driving, and other charges are pending. Most likely, manslaughter will be added.
I am writing this report the 1st day of a new school year and these same stories happen all over our country, especially this time of year. I am sure you are hearing the same in your home town.
Speeding and alcohol combined with an inexperienced driver is like throwing a can of gasoline on a fire. Things get out of control and explode. Property gets damaged. People get hurt and some even killed.
You may think your child is responsible and would never be involved with something this tragic. You may be right, but your child doesn't have to be irresponsible to cause a tragic accident
When you get down to the root of why so many teenagers cause accidents, the core reason is that they just don't have the experience yet.
I can tell you many other stories of responsible young drivers that cause accidents without even being negligent.
Stories where alcohol, speeding or careless behavior was never involved. They were caused because teen drivers simply don't have the experience to control their vehicles when they get into a sticky situation.
The reason why I am sharing these stories and examples of what can happen is because I have seen it happen and seen it happen too often during my years in this business. And I don't want it to happen to you- just because no other insurance agent shared this with you.
What happens when your teen driver causes a serious accident?
The number of million dollar plus lawsuits are on the rise. They are the result of serious injuries and wrongful death car accidents.
If someone is paralyzed in a car accident, how much will it cost to care for them for the rest of their life? What if someone (or more than one person) is killed? How do you put a price on someone's life?
You don't. The courts will.
Are you prepared to handle a lawsuit for a million or more dollars right now? Do you have enough assets to pay for it? Are you prepared to pay a portion out of every paycheck you make for years to come? Or... are your insurance limits high enough right now?
I want you to know that I truly believe in insurance and how it can save a family from a devastating lawsuit. Some years ago, when I was just a rookie in this business, I learned just how important quality protection is.
True Story- A client of mine picked up her 10 year old son and his friend from school. She was driving down the street when a dog shot out in front of the car. She swerved and hit a telephone pole. Her son's friend was permanently paralyzed from the waste down in the accident.
That poor 10 year old was forced to spend the rest of his life in a wheel chair. We knew a lawsuit was coming and fortunately, my client was well covered. These folks had a lot of assets that could be taken from them in a lawsuit. They also knew how important quality insurance protection was.
Their car insurance policy had high bodily injury limits and they were wise enough to take our advice and get a million dollar liability umbrella for the worst case. The claim totaled $875,000- much less than expected and probably not enough to provide long term care for the little boy.
That was over 9 years ago and similar lawsuits today are much higher.
So, how can you protect yourself for the worst case? Here are some suggestions:
Have your insurance reviewed by an expert that understands family protection, especially one that knows how teen drivers should be protected. Here are some of the points a good family protection specialist will recommend:

• Make sure your car insurance limits for bodily injury are the highest your state allows. (Minimum $250,000 per person, $500,000 per accident)
• Make sure your Uninsured Motorists and Underinsured Motorists limits are high too. (Minimum $250,000 per person, $500,000 per accident)
• Get a Personal Liability Umbrella. A million dollar umbrella is probably enough for most families, but if you own an expensive home or have a high paying career, I'd recommend at least a 2 million dollar umbrella.

You will be surprised that the cost of making these changes won't make much difference in what you pay for your insurance. In fact, many people end up getting all of this coverage and still save money!
How?
Many insurance agents understand how to protect "responsible" families at the lowest cost. The rates are lower for "responsible" families and they help their customers reduce the likelihood of an accident which leads to claims.
This allows the insurance company to keep your rates down but still offer high quality protection. So, you buy your insurance at a reduced rate and increase your coverage! Make sense?
Congratulations on taking the first critical step to protecting your family's future. Don't delay on taking that second step. Call your agent today. Every day that goes by leaves a window of opportunity for a tragedy. Get protected today!
Wishing you and your family great health, happiness and prosperity!

Protect Your Assets - Umbrella Insurance Policies Expand Auto and Home Liability

Most homeowners have a homeowner's insurance policy, as it is a requirement when financing a mortgage with a bank. Homeowner's insurance, also known as hazard insurance, protects against the loss of a home to fire or other designated perils and includes coverage of home contents, personal liability coverage, and loss of use.

Automobile liability insurance covers you when you are involved in an accident. Most policies provide up to a maximum of $500,000 in coverage, where an umbrella policy can increase that limit by an extra $1 million or more, depending on the amount of financial protection you want. That way by adding umbrella insurance, you are likely to have the necessary limits to cover you in a serious accident. An umbrella expands coverage in the event a legal claim is filed against you from any involved parties.

An umbrella policy can cover claims for which you have no insurance as well as providing an additional amount over your underlying automobile and homeowner' s liability limits. Most people buy automobile and homeowners insurance from the same insurance provider because they receive a multiple coverage discount. Therefore, umbrella coverage would cover any liability for the home and automobile as well as any automobiles, boats, recreational vehicles, and other items that fall under the umbrella. The primary purpose of an umbrella insurance policy, then, is to protect your personal assets from liability claims.

For the most recent data available, the National Highway Traffic Safety Administration reported that vehicle crashes were the 11th leading cause of death for the general population in the United States in 2009. For those aged 4, and all ages 11 through 27, motor vehicle crashes continue to be the leading cause of death. With over 5.5 million car crashes annually, there were more than 30 million injuries with nearly two million people requiring hospitalization for injuries they sustained.

If the number of vehicle crashes were not enough to have you consider adding umbrella coverage, certain aspects of your home may also warrant added liability coverage. Owning a home with a swimming pool or trampoline, for example, is a good reason to consider an umbrella policy. If an accident should occur, extra liability coverage will help cover court costs and any damages up to the liability limit of the policy.

Without umbrella insurance coverage, you would be personally responsible for paying off any damages of an awarded personal injury and other related costs included in a liability claim. Just one unfortunate event can result in a catastrophic financial outcome for you and your family.

Available in increments of $1 million, umbrella insurance can protect your family from financial ruin. Your insurance agent or broker will be more than happy to discuss umbrella policy alternatives with you given your personal situation. One incident can pay for the cost of the premium many times over. Despite the fact that umbrella policies are quite affordable, if you are cash strapped, you may want to consider increasing your deductible on home and auto insurance to give you the cash necessary to protect you and your family from a successful liability claim.

When Did You Last Review Your Insurance Coverage?

When is the last time you compared rates on your home and auto insurance policies? Unfortunately, policies held for a long period of time accompanying a stellar safety record don't always translate into lower insurance rates. Even if you think you have a good rate, shopping around periodically is smart.

After receiving my April newsletter and attempting to follow my advice of maintaining an umbrella insurance policy, one of my readers contacted his insurer to add coverage. This reader was shocked when his insurer informed him that he didn't qualify for an umbrella policy because he didn't carry sufficient liability insurance on his auto policy. (Minimum auto liability insurance - frequently $500,000 - is required in order to purchase umbrella coverage.) Although this individual had owned his policy for eight years, he was unaware that the policy only provided $50,000 of liability coverage. This amount was clearly insufficient for an individual approaching and preparing for retirement.

In addition to realizing that he was severely underinsured, this individual discovered he was also paying excessive premiums. For only $50,000 of auto liability coverage, this person was paying $914 per year. Moreover, the individual realized he was paying $351 per year for the $350,000 of liability coverage the individual had on his condo.

Consequently, in total, this person was paying $1,265 per year for $50,000 of auto liability and $350,000 of home liability coverage.

This individual then spoke with an independent insurance agent to increase auto liability coverage to an amount that enabled him to obtain an umbrella policy. This was critical, as it dramatically decreased the individual's liability exposure, a risk an individual with accumulated assets clearly shouldn't have. Even better, the individual was able to obtain dramatically improved rates on his policies. For a total of $1,207 (less than he was previously paying!), the individual was able to secure $1,000,000 of auto liability coverage, $350,000 of home liability, and an additional $1,000,000 umbrella policy.

Clearly, it can be beneficial to occasionally review and compare rates on your insurance policies. People tend to believe that policies that have been owned for extended periods of time are efficiently priced, but it may be the opposite. If you haven't verified that you are adequately insured and conducted a cost comparison recently, speak to an independent insurance agent and minimize your exposure with cost-effective policies.