An umbrella policy — peace of mind for today’s market
Finding peace and security in a litigation-happy land
By Nate Allie, AAI, CIC - Vice President, Payne Financial Group
Many people, including business owners, do not give adequate thought to their insurance coverage and programs. Generally, they review their coverages once a year, often giving more consideration to their property coverage than to their limits of liability.
As someone who works with insurance on a daily basis, it is my professional opinion that every individual and business needs to have an umbrella policy for the following reasons: 1) We live in a litigious society where many people feel entitled to be compensated. 2) There are limitless unforeseen events that could cause you to need an umbrella policy. 3) They are quite inexpensive.
An umbrella policy adds $1,000,000 in coverage to each “underlying” policy. I would like to use myself as an example. I own a home, a car, a lake cabin, a boat and a Jet Ski. Therefore, I have an auto policy, a boat policy, a personal watercraft policy, and a homeowner’s policy that covers both the house and the cabin. Each of those policies has a $500,000 liability limit. For about $175 a year, I was able to buy a $1,000,000 umbrella. With the umbrella policy, I now have $1,500,000 to cover any claim.
I hope I never have to use my umbrella. With that said, every time someone climbs on my Jet Ski, or I see my kids and their friends jumping on the trampoline in the back yard, I feel better knowing I have the extra coverage. In my opinion, $175 a year — or 50 cents a day — is inexpensive peace of mind.
I used my personal example above because it is easier for people to envision themselves in similar situations. However, it is even more important for businesses to have an umbrella policy. Businesses have more exposure to lawsuits than individuals do. As a general rule, businesses also have greater assets to protect than do individuals. Often we provide our business clients several $1,000,000 umbrella “layers” in order to get them adequate limits. It is not uncommon for businesses to have total liability limits of $5,000,000 or more.
In today’s world, umbrella policies are needed to provide the additional coverage necessary to protect your assets and provide you peace of mind. Currently, the insurance market is “soft” and rates are coming down. Because of this, we are seeing many commercial clients purchasing umbrella layers at little or no additional cost to their overall insurance program.
I strongly recommend that you talk to your agent today about getting an umbrella quote. You might be surprised at how inexpensive it is. In fact, I would say you can’t afford not to.
Nate Allie is a Vice President for Payne Financial Group. He can be reached directly at nallie@pfgworld.com.
