Umbrella policies used to be only for the rich and famous, but that’s not the case anymore. In fact, personal umbrellas are a standard purchase for most middle-class insurance buyers who have a realistic understanding of their risks in a litigious economy. Umbrella policies are a smart way to get a lot of coverage at a very small cost. It’s an extra layer of liability protection on top of your home or auto policy and serves as a protective shield against a very rainy day.
Am I at risk?
You hire a painter to paint the trim at the top of your house. He falls off the ladder and is killed. Even though the painter is found partially responsible, the case results in a $1.5 million settlement to his survivors. Would your current policies provide all the protection you would need in this case?
Your daughter is having a pool party at your house for her Sweet 16 Birthday. One of the teens decides to dive into the shallow end of the pool and hits his face on the bottom causing major damage to his jaw, teeth and eye socket. He requires months of reconstructive surgeries to repair the damage. Are you ready to write a check to cover his medical expenses?
While driving to work, you strike a bicyclist who happens to be a doctor. His injuries include a broken pelvis and a concussion. He must have extensive physical therapy and isn’t able to work for four months. His annual income is $350,000 and as a result of the accident he loses $120,000 in wages and incurs medical expenses of over $500,000. Do you have enough equity in your house to cover this? How about in your retirement account?
These situations occur all the time and can happen to anyone. And just one lawsuit from an injury or accidental death could cost millions of dollars – enough to wipe out all of your savings, retirement account or even future wages – because you are liable for a court-ordered settlement even if your insurance doesn’t cover it.
Families with assets including homes, retirement accounts, brokerage accounts and cars are at risk to lose everything they have worked for since basic policies only cover a portion of these possessions.
Talk to your AAA Insurance consultant to determine if you need an umbrella. It could be the best $200 you ever spent. To reach a AAA consultant near you, call 800-424-3751 or go to http://www.AAAinsurance.com
Jim McCafferty is President of The Members Insurance Company and UIC.