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Umbrella Insurance

Protect Yourself, And Your Family, In Case You Get Sued

What you'll discover in this report:

  • How easy and common it is to be the target of a lawsuit
  • Why you may need more than your current insurance
  • How to get massive protection for very little
  • How Umbrella Insurance works

It's Easier Than You Think To Be The Target Of A Lawsuit

So often we think that rainy day will never come, so we sometimes don't think about planning ahead, or we complain about the cost of insurance. But what if someone hits you with a lawsuit that goes over and above what your insurance will cover? This is when you'll need Umbrella Insurance.

Think it can't happen to you? We hear everyday in the news about someone else getting sued. You'll want to make sure that you have Umbrella Insurance to protect your financial well-being.

A lot of lawsuits get settled. Actually, most get settled. Often, the person being sued winds up having to pay the person who brought the lawsuit. Not to mention the fees the defendant has to pay to his or her attorney.

How Far Does Your Current Insurance Really Go To Protect You?

* Example. Say you're at fault in an auto accident that causes serious injuries to the driver and/or passenger(s) in the car you hit. Your auto insurance has liability limits of $1,000,000 per accident. (Which is pretty common limits, by the way, even for people with a lot of assets.)

How far do you think $1,000,000 will go, particularly if the persons involved suffer injuries that keep them from working for months, or years? The accident victims could sue you for medical bills, lost income, even pain and suffering. In this scenario, $1,000,000 is not nearly enough coverage.

Guess what happens if you're hit with a judgment for $2,00,000 in the case of one person involved in the accident. Your auto liability insurance will cover the first $1,000,000 -- and you're stuck with the rest. Again, that doesn't include the legal fees you have to pay to your attorney. And, in some cases you might have to pay all or part of the legal fees the other party or parties incur. Ouch.

If you don't have a combination of insurance and cash on hand to pay the judgement, the court can order liquidation of your assets (including your family's home!) In the province of Ontario, if you still owe money after these resources are exhausted, the court can order you to pay a percentage of your future earnings, called wage garnishment.

Umbrella Insurance may seem unnecessary, it really isn't. Particularly if you have a home and other significant assets to protect. Do you really want to hand over your home, savings or future earnings to someone you injure in an auto accident? It could happen. But it doesn't have to.

Massive Protection For Less Than A Cup Of Tim Horton's A Day

Because the need for Umbrella Insurance is not as common as other insurance needs, it's less expensive. But if you need it, it covers your assets beyond your other insurance. It's also versatile. Umbrella Insurance provides additional liability coverage not only for your auto policy, but also your homeowners or renters policy.

And if you have "toys" such as boats, motorcycles, ATVs, snowmobiles or a motor home, the umbrella coverage can be customized to provide additional liability protection for these possessions as well.

*Note. Umbrella insurance doesn't cover everything. For example, if you're sued and the court assesses punitive damages against you, those damages won't be paid by your Umbrella Insurance.

What are punitive damages? They're damages awarded to someone in order to punish the person being sued. Punitive damages are awarded for outrageous, totally reckless conduct -- at least what a judge or jury perceives to be outrageous, totally reckless conduct.

You can usually buy umbrella policies with $1,000,000 limits for around $100 per year, depending on the number of cars, homes, "toys" and young drivers in the household. If you need more than $1,000,000 limits, you can usually buy each extra $1,000,000 of coverage for $100 to $200. Think about this. For only a few hundred dollars, you can increase your per-person liability limits 5 times, 10 times, or more -- and it applies to your Auto, Homeowners or Renters Insurance, and the insurance for your "toys" as well.

How Does Umbrella Coverage Work?

Umbrella insurance actually "sits" on top of your auto, homeowners or renters, and other policies with liability coverage. Let's assume you have a per-person liability limit of $1,000,000 on your auto policy. Say that you cause an accident in which a driver or passenger in the other car is ultimately awarded $2,000,000 for their injuries and loss of income.

Your auto policy will pay the first $1,000,000, and your umbrella will kick in the remaining $1,000,000.

Because umbrellas provide coverage over the top of the auto, homeowners or renters liability limits, some insurers offering umbrella policies require you to have your auto and homeowners policies with these companies as well. That's not typically a problem because most insurers are happy to be able to provide someone's Auto, Homeowners or Renters, and Umbrella insurance, and often offer multi-account discounts which reduce your costs even more. We also represent companies that can write a "stand-alone" umbrella policy in those cases where you need to place your auto and home coverage with different insurance carriers.

Most insurers offering umbrella coverage require you to have liability limits of a certain amount on your auto and homeowners policies. The cost for increasing your underlying policies to these limits is fairly minimal.

Our licensed agents will be happy to assist you in reviewing your options and finding the best combination of coverage and value for your budget and your family's needs. Call us to discuss umbrella coverage further.