An umbrella policy is a form of insurance that protects your assets and future earnings against costly lawsuits. This policy provides additional liability coverage beyond what is offered by homeowners and auto insurance policies. Ana Robic is chief operating officer at Chubb Personal Risk Services. “Catastrophic financial losses could happen in seconds.” You can save your money by purchasing an umbrella policy, which can provide coverage that covers millions of dollars, as well as medical expenses and legal fees. However, you don’t have to pay hundreds of dollars for it.
- A Teenage Driver is Available
Young drivers are more likely to be in an accident. This is why premiums for auto insurance can get so high when they add teens. If your teenager is involved in an accident that causes injury to another person or damages their vehicle, an umbrella policy will pay more than the liability limits of your auto insurance policy. It’s also a good idea for drivers of all ages to add underinsured/uninsured motorist coverage up to the liability limits of their umbrella policy. This covers you against injuries and damages caused by drivers who don’t have insurance, or have too little liability coverage. It usually costs $100 to $200 per year to add uninsured/underinsured motorist coverage to your umbrella policy.
- You don’t choose your words wisely
Social media allows you and your children multiple outlets for expressing yourself. If your comments cause harm to others, they may sue you for personal injuries. Nationwide Insurance has these examples: The contractor sues you for business loss after you vent your frustration about the kitchen remodel. Your teenager sends a inappropriate photo of a classmate to friends. The classmate’s parents then sue everyone who saw the picture. If you write a letter, picket or speak at school meetings or town council meetings, you could also be at risk.
- You party hearty
There are many risks associated with entertaining, including a guest falling on your property or getting hurt diving into your pool. Then there’s “social host liability” which is the legal term for someone who serves alcohol to their guests.
- A Swimming Pool is a must-have
A homeowner can be sued if someone gets hurt while they are at their house. But the risk is higher if there is a swimming pool, where someone could sustain a serious injury to their head or neck or drown. Robic from Chubb says that there can be a tragedy with lifelong care needs. Under your homeowners insurance’s medical payments coverage, you can cover some medical expenses. However, the liability coverage (and umbrella policy) can help pay for some long-term care costs.
- A trampoline is yours
One example: A woman from New York joined her nephew on their home trampoline jump in 2012. The child was not in sync with her and jumped off the trampoline. She fell off her balance and her foot hit the mat. This caused multiple surgeries, ongoing pain, altered gait, future arthritis, and additional surgery. A jury awarded her $220,000 in past pain and suffering, and $580,000 in future pain and suffering.
- You are on a Nonprofit Board
You could be sued by a member of a nonprofit board if you are serving on it. “The biggest exposure is for things like bad decisions, harassment claims, libel or slander,” says Bill Wilson, founder of the InsuranceCommentary.com blog. Nonprofit boards usually have officers and directors insurance. This covers them against lawsuits. But make sure to ask about the limits and coverage. Robic of Chubb says that many boards have very low limits. She says, “Say they have $1million in liability limits and there’s 14 board members.” “If there is a claim that names all 14 board members, it could reach these limits and leave you exposed,” she says.