Most people I talk to daily have never heard of an "umbrella" policy, or if they have, they don't know what it is, or they just think it is something that they don't need.
You work hard, have a nice house, nice cars, investments, savings accounts, in other words, you accumulate assets over time. An asset is any item of economic value owned by an individual or business, which could be converted to cash.
So what happens if you get in an accident, you hurt someone, get sued, go to court and a jury awards more to the plaintiff than you have coverage for? Your insurance company strokes a check for your policy limits and everybody is happy, right? Not so fast.
You recall what happened to OJ Simpson and Richard Scrushy after their civil trials? The jury/judge awarded the plaintiffs large sums of money. Since there was apparently no cash to settle the judgments, the plaintiffs have a right to seize the defendant's personal property (assets), as well as the ability to collect any future earnings.
A liability umbrella policy is excess liability coverage over and above your auto and home liability limits, often starting at $1 million, that will help protect your assets in case the unthinkable happens. A million dollar umbrella policy cost on average about $15 per month, or to break it down even further, about fifty cents per day! (Cost vary depending on number of cars, age of drivers, at-fault accidents, violations, etc).
True story that recently happened to one of my policyholders who agreed to let me tell his story: My policyholder loaned his van to his brother who needed to move some stuff. His brother rear ended a vehicle on I-285 in Atlanta. He hit the car in front of him so hard, the lady's seat broke and she was taken by ambulance to the hospital. About 2 months later, my policyholder got a letter in the mail from the lady's attorney advising that his client had $181,000 in medical bills, and to let him know how he intended to settle the claim. The amount of bodily injury coverage on his auto policy? $50,000. Let's say the case goes to court and the lady is awarded $750,000 for her medical bills, pain and suffering, lost wages, inconvenience, mental anguish, emotional distress, and future rehab. The attorney has every right to go after my policyholder's (and his brother's) personal assets.
You might wonder why my policyholder would be liable since his brother was driving. The titled owner of a vehicle can be held liable for the negligent acts of a permissive driver, and the owner's insurance is primary. (Think about your kid at college letting his friends drive his/her car titled in your name. Your kid's friend has a wreck driving your car- YOUR insurance pays!)
I had talked to my policyholder on several prior occasions about increasing his coverage, and the need for an umbrella policy. He always told me he just didn't see the need. After this incident, he said he wished he had listened. Of course, he now has an umbrella policy.
Look into getting an umbrella policy. Is peace of mind worth fifty cents a day?
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