Break Out Your Umbrella

Umbrella policies are definitely the most underestimated insurance product out there on the market. I don’t know of too many agents who recommend them on a regular basis and I know of even fewer people who have one. What is an umbrella policy you ask? I explain it to my clients as being an extension to the liability limits you already have in place on your current insurance policies, namely your auto and home insurance. Let’s say that you are in a severe auto accident and are found liable for hundreds of thousands of dollars in medical bills for 2-3 people. Once a settlement is reached in court they will require the insurance company to pay out according to the liability limits in place on the policy. If those limits are not enough to pay the settlement you will be held responsible to come up with the remainder of the balance. However, those who have an umbrella policy will be able to lean on the umbrella to take care of the short fall. It is very rare for an occasion to arise that would require your umbrella coverage to be utilized, but the fact is that there are indeed reasons to have one (especially if there is a teenage driver living with you). For example, I found this article in the “The New York Times” (http://www.nytimes.com/2008/03/18/business/businessspecial3/18insure.html?_r=1&pagewanted=2&ref=businessspecial3)

“One of Mr. Cox’s clients crashed into the rear of a car on a slick highway. A woman and a child were critically injured. After two years of litigation, his client settled the lawsuit for more than $5 million. The client had $15 million in umbrella coverage. The policy paid for the settlement and all legal costs. “Without the umbrella,” Mr. Cox said, “they would have been completely wiped out.”

Because of how seldom umbrella policies are actually used to pay out on a claim, they are very affordable. Your average 2 car & 1 home family can expect to pay anywhere from $175 - $250 a year for a $1 million umbrella, the more ‘millions’ you purchase the cheaper it is per million dollars of coverage.

Talk to your insurance agent today if you don’t have an umbrella. Ask him/her to give you a quote and find out if they can break it down to a monthly payment with your auto insurance because it’s definitely worth the extra $15 a month.