Should you carry an Umbrella today?

When it looks like rain, you may want to have your umbrella handy to so you don’t get wet, or catch a cold. But the umbrella I’m referring to is not for rain, it’s for a claim.  People carry a Personal Liability Umbrella policy because they know that a lawsuit can come anytime.  It can come from any auto accident, major or minor.  It can come from someone slipping on ice in their driveway, or a drowning in their swimming pool. They know that if they don’t have enough coverage to pay for the damages, they can lose their assets like their home, savings, and investments.

But time and time again, I review insurance policies to find most people have had the same liability coverage they had since they were in their 20’s!  Think about it, is your net worth the same as what it was when you were 25?  Are medical costs the same as what they were in 1985? Of course not.  But the fact is many people carry $100,000/$300,000 liability limits on their auto insurance, and $300,000 Personal Liability on their Homeowners insurance. Why?  Because that’s what they were sold when they first bought an auto policy, and nobody explained how the coverage works and what their exposures are.

Please read this carefully, because I am going to explain how your liability coverages work.

If you have $100,000/$300,000/$50,000 auto and $300,000 homeowners limits, here’s how your policy will respond:

1) If you cause an accident with injuries or fatalities, your policy will cover the other party’s medical expenses, lost wages, pain and suffering, permanent scarring or death  for a maximum $100,000 each person; and a maximum of $300,000 for the entire accident, regardless of how many people are injured. 
2) If you cause property damage, the maximum your policy will pay out is $50,000 regardless of how much damage occurs.
3) If someone is injured on your property, and you are held legally liable, the maximum the policy will pay out is $300,000 per accident.
4) Once the maximum liability amount has been paid, your insurance company will no longer provide your defense. You will have to hire and pay for your own attorney!

Did you know that increasing your auto liability coverage to the next level of $250,000 per person/$500,000 per accident may increase your premium just pennies a day?   Or adding a Personal Liability Umbrella that gives you another $1, $2, $3 or $5 Million of protection starts at about $150 -$200 a year? You can even add other properties, motorcycles, boats,  or jet skies to an umbrella policy. All it takes is one serious accident to ruin your financial security. I urge you to contact me to discuss your liability protection.    

Click here to learn more about a how a Personal Umbrella works.


Maggie Nessim, CIC
Faller Insurance Agency