WHAT IS AN UMBRELLA POLICY

THREE REASONS YOU NEED TO HAVE AN UMBRELLA POLICY

  1. If you own your home or properties outright with no mortgage, they are assets for a 

 judgment against you that an Umbrella policy would protect;

  1. The cost of umbrella coverage is usually quite reasonable for the level of protection;
  1. An umbrella policy covers not only you, but your family members or residents of your household against excess liability on your auto’s homes and boats collectively;

What is an umbrella policy?

You have probably heard the term umbrella coverage but may not know exactly what that means. An umbrella policy as it is usually referred to in the industry is a type of personal liability insurance policy that will cover you and your family for claims that are over and above or in excess of your regular homeowners, auto, or boat policy insurance. Umbrella insurance covers not only the policyholder but members of your family and household as well. Umbrella policies cover injuries to others and/or damages to their personal property. It generally does not protect your own personal property but rather covers you against liability. There are some umbrella policies that do have Uninsured motorist coverage and if you can find that type of policy, that is the best type of policy to get. 

Umbrella insurance is generally quite reasonable and if you own your home out right without a mortgage or have substantial personal assets that could be executed against (for example you do not have mortgages on your homes, loans on your vehicles, large savings or business property) it may well be worth the cost to protect you and your family. 

How an Umbrella policy protects you

The best way to really explain how an umbrella policy can protect you and your family is through the use of examples. Basically, an umbrella policy is excess coverage meaning additional money that can be paid to someone you injure in the event that your underlying insurance policies do not have enough coverage. This is an area that people rarely think about when buying insurance. People purchase their insurance and they generally do not think of the worst-case scenario. As attorneys, that is what we do. Having worked for a major insurance company for many years, I have seen many situations where people have been in the position that they do not have enough insurance coverage to cover the liabilities that they have incurred. Often this happens when you have teenage children. The best way to convey the need for an umbrella policy is through the following examples:

  1. Your teenager goes out and gets into an accident or someone is seriously injured causing them to suffer an amputation. Your policy is a 100/ 300 policy which means $100,000 per person and $300,000 per accident which is generally acceptable and considered to be enough coverage for most situations. As you know, $100,000 would not be near enough coverage to cover someone who loses a limb in an accident. Although your insurance company will continue to defend you because the duty to defend is separate from the duty to pay, ultimately a judgment against you could be rendered for over $100,000 and he would be personally liable for that judgment. The injured party could execute the judgment on your home, bank accounts, and  on even your income.
  1. Picture another situation where you send sandwiches to your child’s school in a good faith effort to provide a snack for the kids. Unfortunately, one of those children suffers a severe anaphylaxis reaction and requires hospitalization. Suddenly the $100,000 that you have in liability coverage on your homeowner’s insurance policy does not cover the child’s extensive hospital stay. Your umbrella policy would cover those damages. 

I could go on and on and list different scenarios that I have personally observed over the years where the underlying policies are not near enough to cover the damages inflicted. These are always accidents and never intentional. 

Who is covered by the policy? 

As you can see from these examples referenced, an umbrella policy covers not only you, the policyholder, but everyone in your household. This can be extremely important for families with teenage drivers. We pray that our kids will be careful and most of the time they are. However, sometimes their inexperience lends itself to accidents that cause extensive damage. Not only teenage drivers can cause liability but having lots of kids at your house playing in the pool or running around can lend itself to kids getting hurt and incurring hospital bills over and above your regular coverages. Having this additional coverage for unforeseen accidents that can occur with your family members can protect your family from catastrophic liability and your assets. An umbrella policy can also cover many tragic situations that unintentionally happen in everyday life from various accidents.

Deciding whether you need an umbrella policy.

When buying insurance, especially when bundling your home and auto, you should always ask the agent about the cost of an umbrella policy. It is a decision that can only be made once you know what your options are in buying insurance. Sometimes the agent will try to advise you against an umbrella policy and state that it will make the “lawsuit happy lawyers” just sue you. I can tell you as an auto and injury attorney and a long-time insurance defense attorney, I have seen many cases where the injuries are not driven by a “lawsuit happy attorney” but by a serious accident. Unfortunately, death, loss of limb and catastrophic injury are not as uncommon as you would think from auto and pool accidents primarily. Sadly, people die every day in these types of situations and the damages are not driven by “lawsuit happy attorneys” but experienced auto injury attorneys like my firm and by the tragedy of the losses themselves.  

The question is how likely you are to find yourself in the situation? Thankfully, the odds are small and that is why the cost of umbrella policies are not usually that high. It is basically like gambling.  You put your money on the table and hope that you will not need the coverage but in the event that you do it will save you from potential bankruptcy and can  save your family’s economic stability  and most likely your retirement.

The costs of umbrella policies

The cost of an umbrella liability insurance policy is contingent upon the coverage you purchase, the state you live, and your level of risk based on your claims history. The more homes or cars and household members on your policy the more expensive it will be. But as far as insurance goes, the cost of an umbrella insurance policy is quite reasonable compared to other types of insurance, especially considering the level of coverage they provide. Most umbrella insurance policies provide at least $1 million and generally cost about 150 to 350 per year. You can expect to pay about another $75 per year for a $2 million policy. You can see that no other type of insurance that provides this level of coverage at anywhere near this cost. That is because the odds that the insurance company will have to pay out on any one given policy are slim and insurance policies are underwritten based upon the odds of liability.  That is why they are cost-effective and a reasonable way to protect your family from the unexpected. The cost of these policies is born between many homeowners and auto insurance policy holders so the company can spread out their risk.

Requirements to be eligible for an umbrella policy

In order to obtain an umbrella insurance policy, you must have your home and auto with one carrier. In addition, you must carry a certain level of coverage. You cannot maintain the state minimum policy of 25,000 per person and $50,000 per accident and purchase an umbrella policy. Most major carriers require at least a 100 per thousand dollar per person and $300,000 per accident and some carriers require much higher than that to purchase an umbrella policy. What that means to you is that your auto insurance rates may be slightly higher in order to be able to purchase an umbrella policy depending on the level of coverage you currently hold.

When to purchase umbrella policy

If you have paid off your home, an umbrella policy is something you may definitely want to consider. It is a very simple process, and you will need to call your agent.  You may be able to purchase this online but we highly recommend that you contact the agent to make sure that everything in your file is correct. Sometimes in the electronic world  information does not get transferred and it may show in your file that you do not have a pool when you actually do have a pool. When purchasing this level of coverage, it  is wise to discuss the purchase with the agent on the phone or in person and go through your home and auto coverages at the same time.  

Meaning, you want to  make sure everything for your home is insured properly –if you have a dog, that it is covered — if you have a pool,  that it is covered.  This is important because if it is not listed in your policy correctly and you have a claim because of a pool, or a dog  they can deny your claim because they never input the information correctly and then that’s a whole new lawsuit. If you have any questions or would like any additional information regarding the purchase of a personal liability umbrella policy, please do not hesitate to call us at TheOnelawyer.com, at any time. We are always here to talk about your casualty liability insurance needs to make sure your family is protected in the event of an accident.

By contacting a lawyer immediately, you can receive the most money for your injury claim. At TheOneLawyer.com we will quickly obtain the report for you.   Having worked in the insurance industry as an attorney for 9 years before opening our boutique law firm specializing in helping injured people, I reviewed thousands of insurance policies.   With extensive experience in the insurance field, I can help you review your injury claim and maximize the money you receive in your pocket after your bills and fees are paid.

At TheOneLawyer.com, we are here to serve our community and provide legal services in the Henderson and Las Vegas area. We are a boutique law firm providing experienced and personal representation to injured clients.  At the Law Offices of Laura Payne-Hunt, TheOneLawyer.com we provide professional and personal service to each and every one of our clients on various legal matters and have over 15 years of experience in reviewing insurance policies and in Nevada insurance law.   If you have a question regarding any type of personal injury or paying your medical bills from an accident, please do not hesitate to call the offices of TheOneLawyer.com and speak directly to attorney Laura Marie Payne-Hunt, Esq. a Henderson Injury Attorney for over 15 years.  Laura is recognized as one of Nevada’s Top 100 Lawyers.  She has the experience and knowledge to obtain the maximum settlement you deserve.  Please call our office if you or a loved one is injured.  We can make sure that you receive the care you need and deserve and advise on how to preserve evidence.  

At our office, we are experienced in helping injured victims get the compensation they are entitled to.  Insurance companies never have the best interest of the injured person at the top of their priorities.  They want to pay as little on every claim as possible.  Having worked for an insurance company as an attorney for 9 years before opening my boutique law firm specializing in helping injured people, I have reviewed thousands of auto accident claims and policy provisions.   

At the Henderson and Las Vegas Accident injury law offices of TheOneLaweyer.com, Laura Marie Payne-Hunt and her staff are here to help you and your family in the event that accidents and tragedies occur.  For any of your legal needs, do not hesitate to contact our Henderson and Las Vegas Accident injury offices.  TheOneLawyer.com is a boutique, family-owned law firm that specializes in helping injured people and the community of Las Vegas and Henderson Nevada with legal issues involving auto accidents, wrongful deaths, slip and falls, truck accidents, injuries to children, bicycle accidents, dog bites, product liability claims, and all types of injury claims.  Please do not hesitate to call us anytime you have a legal question or you or a loved one has sustained an injury at 702-450-(HUNT) 4868 and text 24/7 at 702-600-0032.