While April might be the rainy season, it’s always good to have an umbrella handy when you need one. You know, in instances where your dog might bite a guest at your home, or your teen driver causes an accident that results in severe injuries to others, or simply because you have a pool, trampoline, boat, and a four-wheeler that your children use with their friends.
You see, I’m not talking about the weather. I’m referring to an Umbrella Insurance policy, also known as a personal liability policy. Everyday activities that you and your family do expose you to liability perils. In these instances, you may be covered to a certain extent by a homeowner, auto, or recreational vehicle policy; however, what about that one time that an accident happens, and the damages exceed your liability limits on your policy?
Imagine your children and their friends are playing in the backyard with the dog. Around 5 p.m., one of the friend’s dad comes over to pick up his son. Remember, these are children, and they don’t want to stop playing. As dad grabs his son by the arm, and the child wails even more, “Come on dad! It’s still light out! Can’t we play longer? I don’t wanna go!” Parents have all been there, right?
Your dog knows the child—they’ve been playing together all day; however, this man taking the child is a stranger who is “hurting” his friend. Your dog misinterprets the interaction between father and son, and things escalate quickly. Your dog bites the father. Your homeowner policy should respond if you are found liable for accidents that happen on your property.
Unfortunately, it just so happens that the dad is a dentist, his hand requires surgery and rehabilitation, and he is unable to work with the injury to his hand. Compounding the situation, the friend’s parents are divorced, and the father owes a hefty child support payment each month, which he won’t be able to pay since he is not working while he recovers. His claim is well above your insurance policy’s liability limits, and you are responsible, even if the policy limits are exhausted. This is when an umbrella insurance policy can kick in.
Umbrella policies provide coverage against catastrophic liability exposures by extending the coverage provided in your automobile and homeowner policies by adding a million, or several million dollars, more to the policies’ liability limit. The policy also covers legal defense costs. That might sound like a lot more than you think you need; however, real life claims examples may tell otherwise.
These policies can also cover personal injury claims, including libel, slander, and invasion of privacy—be careful what you or your children say on social media! With any sort of judgment against you, not only your current assets, but your future earnings could be at stake. A licensed insurance agent can assess how vulnerable you are due to your unique circumstances and make a recommendation on the appropriate limit.
If you have questions or need assistance with your insurance coverage, contact the Experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Disclosures: The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
