Personal Umbrella Insurance: Peace of Mind to Enjoy the LifeYou’ve Earned
Umbrella insurance may cover damages for claims excluded under a home, auto or watercraft policy. If, for example, you were sued for libel because of something your son or daughter posted in social media and coverage was excluded under your homeowners policy, an umbrella could provide the needed coverage. Personal umbrella insurance also covers attorney fees and defense costs that exceed underlying coverage, and it can cover costs resulting from a policyholder’s auto accident when the driver at fault is uninsured or under-insured , or when the policyholder is the victim of a hit-and-run. Social Inflation and Nuclear Verdicts In an October 2020 article titled “What Exactly Can Be Taken From You in a Lawsuit?” , Forbes noted that an unfavorable verdict could cost a defendant assets including homes, cars, life savings and “anything you have left.” Using one Illinois attorney as an example of aggressive litigation lawyers, Forbes reported, “When Mario Iveljic, a partner at Mag Mile Law, issues a citation to discover assets in Illinois, he leaves no stone unturned. His firm asks for all checking and savings accounts, partnership agreements and records of partnerships, real
estate (including timeshares), trusts, contents of all safety deposit vaults, title to all properties and a complete list of jewelry, art objects and personal property.” Exposing a defendant’s full net worth enables Iveljic and attorneys like him to capitalize on what’s known in the insurance and legal industries as “social inflation,” the phenomenon of escalating insurance claims resulting from: • Increased litigation and third-party litigation funding • Broadened definitions of liability • A greater percentage of plaintiff-friendly legal decisions • Larger compensatory court awards – some so costly that they’re referred to as “nuclear verdicts” In such a litigious climate, the threat of a lawsuit can be intimidating. One of our knowledgeable team members can work with you to determine what assets a litigant would be likely to seek in a suit and what policy limits you would need to protect those assets. Click here to request a time to chat. You’ve worked hard—enjoy the life you’ve earned. A personal umbrella will cover you and your family.
Written by: Jordan Levitz, GCG’s Director of Personal Risk Management
By most standards, Lisa and Joe are living the American dream. Hard-working professionals, they have three children, a dog, a combined annual income of about $450,000, a 10-room colonial in the suburbs and a lake house that sits on four acres of zoned land. They own three late-model vehicles, one of which their two teenagers share. The parents and kids alike enjoy entertaining, including use of the backyard swimming pool at the main house and a trampoline at the lake house. Lisa and Joe are engaged in their children’s activities and active as volunteers in their community. Lisa coaches their daughter’s soccer team, and Joe is on the board of a conservation group that owns properties used for recreational activities. But what if one day the family’s pet is startled by one of the kids’ friends and bites them? Or one of the teens accidentally drives through the plate-glass front of the downtown bistro? Or a neighbor at the lake sustains multiple fractures on the trampoline? Or Joe’s board is accused of negligence after a hiker falls off a slippery boardwalk on one of the conservation group’s properties? With so many assets, wouldn’t Lisa and Joe be inviting targets for a lawsuit if one or more
of those things happened? Wouldn’t they be in danger of losing their savings, their homes, their antiques and artwork? Lisa and Joe are able to maintain peace of mind because they practice good risk management— including protecting themselves and their assets with personal umbrella insurance. Real-Life Assets, Risks and Protection Joe and Lisa are a fictitious couple, but risks of a liability lawsuit resulting from the kinds of scenarios we’ve described are real. For a relatively inexpensive premium—usually between $150 and $350 annually for extended coverage limits starting at $1 million—you can protect yourself and your family from the type of legal judgment that could cost you everything you own. In short, personal umbrella insurance enables you to secure your future and live your life. Let’s say your homeowners policy has a liability limit of $100,000 and a guest successfully sues you for $200,000 after suffering an injury on your property. Your homeowners policy would pay the $100,000 limit, and the umbrella would cover the balance. Similarly, if your teen driver were to cause an accident resulting in damages that exceeded the auto policy limit, your umbrella policy would pay the difference.
Personal Finance Quarterly | Winter 2022
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