Umbrellas Are Not Just For Rain

It raining... It pouring... The old man is snoring...  With the next month bringing April I though it would be a great time to talk about umbrellas.  Just not that kind of umbrella that keeps the rain of you.

What is an umbrella in the insurance world?  An umbrella is a policy that covers you in excess of your current liability limits.  In stating that it can provide the ultimate protection.  We live in a world where law suits have become everyday life.  I read a story where Tiger Woods' company lost a law suit because they didn't pass out enough autographs.  This should bring to mind what you can be held liable for.

How does an umbrella work?  An umbrella gets it name from the idea that it over shadows or covers all that you own.  So if you have a house, boat, 2 cars, a motorcycle and a golf cart it would apply additional liability coverage to each of the policies.  This is a convenient coverage because it applies to all of them with just one policy.

Here is an example so that it will make a better picture of how the policy works.  For this example you are carrying bodily injury liability limits of $500,000 and $500,000 per occurrence.  You are driving on the highway and you are running late when you run into some bad weather.  You should slow down but you don't because you are late.  You then slide into a intersection and hit a mini van filled with a mother, father and their two kids.  Each one has severe injuries of about $300,000 per person.  For those not wanting to do math that is $1,200,000 of damages you need to pay for.Which is no stretch by any means in today's world.  Well your coverage would completely cover the father of $300,000, most of the mother of $200,000 and you would be out of coverage for the two kids.  You would then have to pay the rest out of pocket which would be 700,000.  I don't know about you but I wouldn't be able to pay for that.  In which case they would take your personal property, savings, retirement, anything they could turn into liquid assets and if that is not enough in the state of Missouri they can garnish wages up to 25% for 30 years.  That is quite a punch.

How do you prevent this?  A $1,000,000 umbrella would prevent this.  You would be carrying coverage $1,500,000 in the two areas that you were only carrying $500,000.  Meaning in this example you would still have you would have covered everything you were liable for.  Not only would you have protected everything you have worked your whole life for but you would have been a responsible human being because you would have paid for what you did.

Umbrellas come in increments of $1,000,000.  How much protection do you need?  That is a perfect question to present to a qualified insurance consultant such as myself.  In our day in age you must know what can happen at any given time and protect yourself from it.  Law suits over a $1,000,000 have over quadrupled in the last 4 years.  The biggest question is would you rather pay for the coverage or put everything at risk with just one accident.