Nearly everyone is vulnerable to a civil suit—even if they didn’t do anything to deserve it. Anyone who has ever been subjected to a phony lawsuit knows that being on the right side of justice carries no guarantees.
If you happen to own a business, that liability is increased substantially. So, anyone hoping to protect themselves against losing assets following a legal battle should seriously consider a stand-alone umbrella insurance policy.
Here is what you need to know:
What is umbrella insurance?
Umbrella insurance is additional liability coverage. It protects people when they are sued after something happened in their home, their car, or because of something they did unintendedly. Umbrella insurance protects you from large claims or lawsuits that are higher than your other insurance policies cover.
Here is an example:
You’re driving your car to work on a rainy morning. You’re running late, so you speed up a bit. Before you can react, you start hydroplaning into oncoming traffic. Your car careens into two other vehicles, causing $50,000 in damages and injuring five people. The medical bills amount to $500,000, and one of the drivers is suing for $450,000 because of the “emotional trauma” the accident caused.
Just that quickly, you’re facing an accident that could cost you one million dollars in damages and injuries. Since you have only $500,000 in liability coverage on your auto insurance, you will need to find the other $500,000 quickly.
At this point, umbrella insurance steps in to supply the $500,000 balance your standard auto insurance didn’t cover—plus, it will take care of the court fees that went along with the lawsuit.
Who needs umbrella insurance?
The short answer to that is “almost everyone.” Practically anyone can be held liable for things that occur on their property, and that is why umbrella insurance has become so popular. Someone who fits into one or more of the following categories should consider purchasing a policy:
- Those who own cars, boats, or any other vehicles
- Anyone who coaches youth sports
- Anyone who owns rental properties
- People with dogs or dangerous pets
- Those who volunteer their time and services
- People who host guests in their home or on their property
- Those who discuss other people or businesses
Some of the things on this list may seem innocuous, but they could easily be the catalyst for you being involved in a lawsuit. For instance, your normally friendly collie escapes from the house and bites someone or perhaps jumps at an older adult in a gesture of friendliness and knocks them over, causing an injury.
Or how about the friend who attends your backyard cookout, trips over the garden hose, and ends up with a concussion. In both of these instances, a lawsuit might follow. And instead of depleting your retirement account or going into massive debt, your umbrella insurance could save your financial life.
Commercial Umbrella insurance could
save a business
A commercial umbrella policy is also designed to supplement existing insurance policies. This means commercial umbrella insurance kicks in when the cost of a lawsuit exceeds the limits of certain liability insurance policies you already have.
For example, let’s say your business is challenged by an expensive lawsuit. It’s so expensive, that the insurance policy you’ve been counting on to cover the claim has reached its limit of $1 million while the cost of the lawsuit is at approximately $1.3 million.
Where will you get the funds to pay that extra $300,000?
Maybe you have the money to pay it, but it’s more likely that you would have trouble coming up with that much extra cash. If you had the foresight to buy a commercial umbrella policy, however, your umbrella insurance would probably cover the $300,000 shortfall.
Truck umbrella insurance
One business in which umbrella coverage is essential is in the trucking industry. Truck umbrella insurance could rescue a business if one of the truckers in the fleet causes an accident. Your basic liability limits can be easily be drained if you are hit with a lawsuit. But with truck umbrella insurance, your policy will take over when other resources have been depleted.
The umbrella policy adds one more layer of critical protection to any of the other policies you already hold, including commercial auto liability, general liability, and employer’s liability policies.
Don’t underestimate your need for umbrella insurance
Don’t overlook umbrella insurance in your financial plan for your personal or commercial needs. The insurance professionals at White Cloud Insurance want to help you protect your property, and they can help you decide how much umbrella coverage you will need.