A Liability Umbrella Policy Can Protect Your Ass-ets!

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?

Neighbor's tree fell on my property! Who pays?

Well, since it is storming outside tonight, I thought it would be a good time to clear up one of the most common misconceptions when it comes to homeowner's insurance.  I am asked about this all the time. 

Let's say a storm comes through with high winds and your neighbor's tree falls over and smashes your wood fence, the kid's playset, takes out your deck, and part of your roof.  When the storm clears, you go over to your neighbor and politely ask for his insurance information.  After all, it was his tree that damaged my property!  You start to envision that new playset, a new roof, new fence, and heck, might as well expand the deck while we're at it since his insurance will be paying for it, right?  Wrong! 

Sorry to say, but your neighbor's insurance will not be paying for your damage.  You will have to file a claim on your own policy, and yes, your deductible will be applied too.  This kind of occurrence is considered an act of God, beyond your neighbor's control.  Unless your neighbor's tree was dead or rotten, you notified them about the danger it poses to your property in writing and requested they do something about it, they are not legally liable for your damage. 

What is GAP insurance?

Everyone is so excited when they drive that new car off the car lot.  There's nothing quite like that new car aroma.  Problem is, that new car depreciates as soon as you drive off the dealer's lot.  A vehicle is considered a "used" car once the title is transferred from the dealer to the buyer.

So, what if you finance 100% of the cost of a vehicle with no down payment for 60 months or more?  (Don't laugh, this happens all the time.)  In the first few years, your monthly payments are comprised mostly of interest, so the principal is not declining much (kind of like our homes).  If you have a wreck and total your car, the insurance pays your car loan off, right?  Not all the time!

Let's say you still owe $10,000 on your car, but the car's book value is now $8000.  If your car is totaled, the insurance company generally pays the book value ($8000) to the lien holder less your deductible.  Who pays the difference between what you owe and what your insurance company paid?  You do!  Unless you bought a Gap policy. 

A Gap policy pays the difference between what you owe and what the car is worth.  These policies can be purchased from the car dealer, or from an insurance agent (like me!), for a minimal cost.  They last for the length of the loan and may even pay your deductible if your car is totaled.

So keep this in mind when you buy your next car, or you know someone who might be looking to purchase.  A Gap policy may save you a lot of headaches!

Alabama Insurers Raising Rates

Article in the Birmingham News Friday Sept 11th:

Farmers Insurance Group:  Statewide 25.7% average rate increase effective Oct 16th with "specialty" policies rising 35% on average. 

State Farm Fire & Casualty:  Statewide 19.1% average rate increase effective Nov 1st for new business and Jan 1 for existing policies.

Alfa:  Statewide 5.8% average rate increase effective Sept 1 and 6.5% increase for customers of the smaller Alfa Mutual General Insurance Company. 

Hey, don't shoot the messenger.  Just call me for a quote!

Uninsured Motorist in Alabama

Did you know Alabama ranks 3rd in the nation for the number of motorist on the highways who are not carrying the minimum amount of liability insurance as mandated by the state?  Approximately 1 in 4 motorist on the highways are not carrying any liability insurance.