It’s going to rain, someday, maybe

  • By Todd Colucy
  • January 25, 2014
  • 362
                        
It’s going to rain, someday, maybe. When I ask people to name off insurances that everyone should have or consider having, most people can name off five or six types pretty quickly. However, there’s two type of insurance that is hardly ever mentioned but I believe they are some of the most important to carry. I’ll cover one of them here and I’ll save the other for later. There was a little bit of a hint in the title of this column and no, it’s not flood insurance although, if you can get it, for the money is a good insurance to carry. The insurance I’m referring to here and will expound upon is Umbrella coverage. I purchased this insurance the day my first child received his driver’s licenses. Oh that day was bitter sweet. Here’s why my first stop after the DMW was to my insurance company. Most auto insurance and homeowners insurance cover the policy holder and their family for personal liability in an amount somewhere between $100,000 to $300,000. Just for the record, I carry $300,000 here. Now let’s assume and heaven forbid, to show an example for this column that a sixteen year old driver caused a serious auto accident where major injury or worse occurs. What’s the likelihood the pending lawsuit as a result of the accident will only be for an amount less than the personal liability coverage on the auto insurance policy? Most likely by the time medical bills, attorney fees, and other costs are all tallied up there’s more due than the auto insurance provides in coverage. This is where an umbrella policy would kick in. This insurance pays the costs where the auto or homeowners coverage stops. Without the umbrella policy, savings accounts would be tapped or assets would need to be sold or wages could be garnished for years to pay for the lawsuit amount that exceed the personal liability coverage of the insurance policy. Now I’m not trying to scare readers here. But I never hear umbrella insurance talked about and sometime the things that cause the most havoc are things we weren’t aware of. By the way, according to Travelers Insurance 80% of the umbrella insurance claims are auto related. Jury Verdict Research says the average jury award for a vehicular accident liability case is $306,000. I’m sure this research factors into auto and homeowner’s insurance setting the personal liability limit at between $100,000 to $300,000. With an Umbrella policy it keeps and accident from being a financial life changing event. Umbrella policies sit on top of all other forms of insurance coverage. In order to purchase Umbrella coverage, most insurers will require a minimum coverage in auto insurance and homeowner insurance before they agree to sell the umbrella policy. Is Umbrella insurance expensive? Not really. A household with two cars and one teen driver can get a $1 million dollar umbrella policy for somewhere between $300 to $400 per year according to the Insurance Information Institution. I’m below average in this area or maybe I have a great provider. My policy cost me $260 a year. When searching for umbrella coverage the company that providing your auto and homeowner insurance is the best place to start. And some companies won’t issue an umbrella policy unless they have your other insurance. The company I used made me get rid of our trampoline or they wouldn't issue the policy. I found that odd but the agent told me trampolines are in the top 2 reasons for homeowner insurance claims. I really enjoyed that trampoline. It was great exercise but it’s gone now. My family’s umbrella insurance has been in place for years now. The premium is money I gladly spend and it’s an insurance that help me sleep more soundly at night and one that I hope I never have to use.


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