Shedding Some Light on Insurance

TASA ID: 2099

I have served as an insurance expert on legal cases over the years and stood witness to an insurmountable amount of cases that center around the agent/broker standard of care as it relates to the type of insurance sold or not sold to a client and if it was the appropriate type of insurance or even adequate coverage. Unfortunately, a discovery of poor standard of care is revealed when it is too late.

Insurance is a complex industry with products that are not easy to understand and not automatically stacked in the insured's favor. Having a trusted agent/broker is a good beginning, but being well-informed is still your responsibility. It is to that end, I offer the following information toward shedding some light toward helping you become an informed buyer of insurance and to have the coverage you need for you and your family.

There are many different types of insurance, and within each are a multitude of policy options that define coverage, totaling far too many to write about in one article. However, I would like to introduce you to, or further acquaint you with, the umbrella liability insurance. This brief should not be considered as insurance advice. You should consult a licensed and reputable insurance broker who is familiar with your particular needs before purchasing insurance.

WHAT IS UMBRELLA INSURANCE, AND DO I NEED IT?

You might be thinking 'I have auto insurance, homeowners insurance, and a portfolio of other insurances, why do I need another policy?' To which I would answer - That's great, but are your current and future assets protected to withstand lawsuits, and wouldn't it be the smart choice to evaluate where you are vulnerable and; therefore, at risk to lose it all in court one day?

Imagine the unthinkable. An auto accident and someone gets hurt. The injured party could be your passenger, a pedestrian or passengers in the other car. The next thing you know, you are being sued for $1.5 million and your auto coverage is for $100,000.00. Your responsibility could be anything above the $100,000.00 auto liability limit or $1.4 million if the court awards the full $1.5 million, and additional legal fees, resulting in a far greater debt. Without liquid assets to write a check to pay the legal fees and court awarded damages, a judgment might follow that claims the right to your home or other assets. Your future might then be moving in with your elderly parents, a recently married child, or paying rent for an apartment. I would imagine that these options were not the life you planned.

The reality is that the auto accident need not be your fault, just as a slip and fall in your home or on your sidewalk, a golf ball gone astray or a boating accident need not be your fault. The reason for the lawsuit and your guilt or innocence is not the issue. The lawsuit's costs of defense and possible judgment are the issues.

Lawsuits are all too common and our courts are filled with cases where one party or other is truly bewildered as to what happened or why it happened, and the day-to-day illusion of, 'not me' has been shattered into a million pieces. Lawsuits can potentially wipe out your assets and leave you drowning in debt.

While your IRA and some other retirement accounts may be protected under federal laws, and your auto and homeowners' policies will cover you within the policy limits, should the suit exceed those limits you would not only have to pay the cost of the defense but also would be responsible to pay any judgment rendered against you. Should this occur, your assets may be at risk. An umbrella liability policy, also referred to as an excess liability policy, is what would be needed to come out the other side of such an event with your assets intact.

Umbrella insurance was created as a type of liability insurance to fill in where other policies fall short in protecting you from major claims and lawsuits. They are specifically designed to provide liability coverage above the limits of other policies or step in once they've been exhausted.  

Sold in million dollar increments, umbrella policy coverage are generally recommended in amounts that exceed your current net worth, not to boost the insurance sales person's commission, but in consideration that your net worth may increase and you want to be sure you have sufficient coverage should the need arise. The umbrella policy could pay for your legal defense, in addition to any judgment that may be levied against you, subject to the terms of the umbrella liability policy.  

You worked hard, saved, planned, invested wisely and now look forward to living your life with the rewards of your success. You may be planning a new home where you look forward to growing your family or enjoying your retirement when one day, seemingly out of nowhere, you are hit with a lawsuit. The lawsuit may be unfair, but that is not the issue. You will have to defend yourself against the suit even if the case has no merits.

The cost of an umbrella liability policy is not considered expensive and your auto or homeowners insurance company may offer coverage for an umbrella liability policy. Remember, the umbrella liability policy provides liability coverage above the liability limits of your homeowners, auto insurance, boat insurance, or other policies that provide liability coverage, as well as for liability in case of events that are not covered under your policies. Check with your current insurance company or with a reputable professional insurance agent to assess your risk and your needs and to explore an umbrella policy. 

To recap, umbrella insurance is additional liability insurance that picks up where your current policies leave off in relation to amount of coverage and situations covered.

• Provides liability coverage above the limits of your current policies.

Once you've purchased the policy, relax and continue on your life's journey with peace of mind and live out your dreams, no matter what your stage of life.

This article discusses issues of general interest and does not give any specific legal or business advice pertaining to any specific circumstances.  Before acting upon any of its information, you should obtain appropriate advice from a lawyer or other qualified professional.

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