Its Raining Lawsuits – Do I Need An Umbrella?
Umbrella insurance and why do you need it? The short answer is that umbrella insurance provides coverage in excess of what your homeowners (or renters) and auto insurance cover. It gets its name because it’s an extra layer of protection, like an umbrella, that provides protection in case of a non- work related lawsuits that are in excess of your existing policies. Why would you need one? Lets say you– our your teen aged daughter - get into a car accident. The accident seemed minor but the other driver and his passenger claim injuries. Let’s say debilitating and difficult to substantiate back injuries. Now let’s say the other driver is surgeon. Your auto insurance limit (often $250,000 or less) could quickly be exhausted by the medical, unemployment and legal claims. Your assets, your savings AND your future earnings could all be at stake. That’s when an umbrella policy come into play. Umbrella policies also covered for types of injuries that your other insurance doesn’t cover. For example, your and the neighbor’s dog get into a scuffle while you’re out on a walk and the neighbor or their child gets bitten and sues you. Homeowners insurance may not cover that claim, but most umbrella policies will. Another reason to have an umbrella - it covers legal and court fees associated with a lawsuit. Defending yourself in court can be outrageously expensive. A frivolous lawsuit can cost $100k to defend. Many times individuals settle even if they know they are not at fault just to avoid paying these fees. With an umbrella policy you can afford a legal team.
What does all this protection cost? Very little. Since an umbrella policy only covers you for amounts and causes above and beyond your homeowners and auto policy, the average policy runs $200 - $300 a year for $1 million of coverage. Additional units of $1 million can be had for as little as $100 a year. Need a pain free way to come up with the extra cash? Simply increasing limits on your existing insurance can often pay for the cost of a $1 million umbrella.
Who should have an umbrella policy? Virtually anyone in the veterinary profession should carry an umbrella policy with a minimum of $1 million. As your net worth increases, so should your coverage. Remember, in a lawsuit you could lose everything – including future earnings. These policies don’t cover everything – generally, damages intentionally caused by the insured, damage caused while operating an aircraft or jet skis and damage to your own property may not be covered. You should always meet with your independent insurance agent and read the policy to decide if it meets you needs.