Umbrella Insurance Policy

March 21, 2012 by staff 

Umbrella Insurance Policy, Given the current bitterness towards the 1%, most wealthy individuals fear they are an attractive target for liability lawsuits, yet they lack a basic umbrella insurance policy, according to a report issued by ACE Private Risk Services today, based on a survey of folks with assets of $5 million and up. One in five of those surveyed don’t have an umbrella policy, and of those who do have a policy, nearly one in four reported having less than $5 million in coverage. Call it the uninsured/underinsured problem of the wealthy.

Why have an umbrella? Umbrella policies kick in on top of auto and home insurance, giving you extra liability coverage. The ACE report includes examples of grisly accidents (decapitation) and outsized verdicts (ranging from $14 million to $49 million), courtesy of defense attorneys. “Severe things can happen,” says Robert Courtemanche, ACE president, adding that folks don’t appreciate how much exposure they have as they lead their everyday lives until an agent walks them through the risks. Think dog bites and defamation charges from sending taboo tweets. Even fender benders can turn ugly. One example:

“An individual was involved in a minor accident on his way to an airport. Both he and the driver of the other car agreed they felt fine and didn’t need police assistance – until his relative arrived in a $200,000 car to help him catch his flight. Suddenly, the other driver complained of pain and insisted they call the police. The case was eventually settled for a substantial sum.”

The right umbrella amount depends on where you live, your profession and your aversion to risk. Liability coverage in home and auto policies rarely exceeds $500,000, yet 13% of personal injury liability awards and settlements are $1 million or more, according to the report, citing data from Jury Verdict Research. The amount of coverage you choose should bear some relation to your net worth. But note: if you’re worth $1 million, a $1 million umbrella is not going to protect you from a $2 million legal judgment, since it would still be worth a lawyer’s time to go after your personal assets.

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