Ducking Under an Umbrella

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Ducking Under an Umbrella

Postby Van Canna » Tue Dec 05, 2017 4:41 pm

I have talked about this before and this is serious 'self defense' and I know that most people reading this do not have this protection.

You needn't be a Court TV fan to know that no one is immune to lawsuits. Directors and volunteers at a nonprofit can be sued over wrongs allegedly committed by their organization. Players in pickup games have been sued after injuring another contestant.

"We've had kids' coaches sued because they were playing catch with someone, and someone else walked in between them and was hit by a ball," says Thomas Ahart, a Phillipsburg, New Jersey, insurance agent.

Lawsuits come when you least expect them. You could be distracted momentarily while driving home from work tomorrow and plow into a school bus or cause a seven-car pileup. Your teenagers could have a party in your backyard pool where someone dives headfirst into shallow water, becoming a paraplegic.

You could rent a Jet Ski on your next Bermuda vacation and injure someone. If you're involved in an accident like one of those, you're likely to be sued, especially if your pockets appear deep.
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Re: Ducking Under an Umbrella

Postby Van Canna » Tue Dec 05, 2017 4:42 pm

"The fact is that we live in a litigious society, and an attorney will evaluate a case against you by looking at what kind of car you drive and what your income level is.

The higher they think it is, the more they'll ask the court for to compensate for damages," says Todd Muller, assistant vice president of technical affairs for Virginia-based Independent Insurance Agents of America (IIAA). "There's an old joke that 'I don't mind getting into an accident as long as the other guy is driving a Mercedes. "

To protect yourself, you need liability insurance. Your auto and homeowners policies provide some coverage, typically at minimum levels of $300,000 and $100,000, respectively. But those amounts fall far short of the legal expenses and damage awards you'd incur in a grand-scale catastrophe. In such a case, after the insurance company paid out its required share, you'd have to come up with the rest out of personal assets or perhaps by having your paycheck garnisheed for years.
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Re: Ducking Under an Umbrella

Postby Van Canna » Tue Dec 05, 2017 4:43 pm

That's where a personal umbrella liability policy comes in. Umbrella insurance picks up where homeowners and auto liability coverage leaves off. For instance, a $1 million umbrella policy would raise your total protection from perhaps $300,000 to $1.3 million. Higher amounts of coverage, which is sold in increments of $1 million, are also available. And all this added protection is provided in return for a modest premium.

Once thought to be primarily for the wealthy, umbrella liability policies are today held by an estimated 6 million to 7 million Americans, many of them solidly middle class. "We say that, generally, if you're someone who has substantial assets or who expects to acquire substantial assets, you need an umbrella policy," says Fred Cripe, an Allstate assistant vice president for specialty lines.

Why not just up the liability limits in your existing policies? Because separate umbrella insurance gives you more for your money. To protect yourself against both auto- and home-related suits, you'd have to increase coverage under both policies. "But in most cases, it would cost more to buy those two pieces separately than to buy an umbrella," says Cripe. And you still wouldn't have the breadth of coverage provided by the umbrella.

At their best, umbrella policies protect you against occurrences not normally covered by your primary insurance. "A classic situation would be where I might go to the lake over a weekend and borrow someone's motorboat and hurt someone," says William Feldhaus, an associate professor of risk management and insurance at Georgia State University. "Auto and homeowners wouldn't provide you with coverage, but in most cases your personal umbrella would."
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Re: Ducking Under an Umbrella

Postby Van Canna » Tue Dec 05, 2017 4:44 pm

An umbrella insurer is also responsible for defending you against claims. It provides legal representation. And since the coverage limit applies only to damages assessed, the company will pay your defense costs in full, even if the suit is groundless.

That's no small matter, as shown by the Paula Jones sexual harassment suit. State Farm and Pacific Indemnity (a Chubb subsidiary), which sold umbrella policies to then Arkansas governor Bill Clinton, have shelled out close to $1 million so far for the president's legal fees, with no end in sight.

You get all this for a yearly premium that generally runs between just $150 and $300. Premiums vary according to where you live (urban areas tend to be more expensive) and whether you have youthful drivers in the household.

The average for a $1 million policy on a couple living in Los Angeles, according to a survey done in an industry journal, is $173 a year; the same coverage in Kansas City, Missouri, averaged $145 a year. If you have more than two cars or additional residences you may also see higher rates.
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Re: Ducking Under an Umbrella

Postby Van Canna » Tue Dec 05, 2017 4:45 pm

Umbrella coverage is so reasonable mainly because so few claims are filed, and fewer still actually reach seven digits--Allstate's average umbrella payout is about $200,000. Nevertheless, you might want to consider more than the $1 million in coverage that the majority of policyholders opt for.

Though you may never need it, the extra protection is a real bargain, and the extra peace of mind you get well worth it. Typically you can buy $2 million in umbrella insurance for 1.5 times (not twice) the cost of a $1 million policy, and $3 million in coverage for only 1.75 times as much. "I personally have a policy for $2 million," says Allstate's Cripe.

When you're shopping for umbrella coverage, however, look beyond the premium. Policies differ in important ways, and cost does not necessarily reflect comprehensiveness.

"With personal umbrellas, the premium price has nothing to do with the quality of coverage," says Doug Kroh, a product research specialist with Tri-State Insurance of Minnesota. "There are forms out there that are more expensive but provide little more additional coverage than just extended limits."
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Re: Ducking Under an Umbrella

Postby Van Canna » Tue Dec 05, 2017 4:48 pm

The Insurance Services Office plans to come out next year with a standardized form for umbrella liability policies similar to those the consulting firm developed for homeowners and auto insurance, according to ISO spokesperson June Bruce.

In the meantime, however, no such guidelines exist. This lack has become more problematic as the policies have become more specific in what they will cover, with competing companies imposing widely differing restrictions.

"Historically, personal umbrella policy coverage was written very broadly," says Cripe. "There were cases and claims that were never intended to be covered that ended up getting covered, so carriers have tended to become much more specific.
We've changed specifically to more clearly outline what constitutes a bodily injury and what doesn't and which cases of intentional conduct we do not cover."


Generally the policy will cover for acts of self defense in protection of persons and property if you use reasonable force under the circumstances.
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Re: Ducking Under an Umbrella

Postby Van Canna » Tue Dec 05, 2017 4:48 pm

Adds Karen Regan, an agent in Little Rock, Arkansas, and head of a consumers and technical advisory group for the IIAA: "When we first saw umbrella policies in the late 1960s and early 1970s, they covered a lot. You could have collected for things like alienation of affection."

These days policies generally cover bodily injury and property damage, as well as personal injury, the catchall term for such offenses as libel, slander, wrongful eviction or detention, and defamation of character.

Typically excluded are intentional acts, business activities, communicable diseases, and, increasingly, sexual harassment. In between is a large gray area where different companies offer varying degrees of coverage. In general, you should shop around for the broadest coverage available.
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Re: Ducking Under an Umbrella

Postby Van Canna » Tue Dec 05, 2017 4:51 pm

Another good idea is to regard all your liability insurance as one package and use the same insurer for your umbrella coverage as for your auto or homeowners policy. "It facilitates coordination in a serious claim," says Feldhaus. It also minimizes the opportunity for insurance companies to argue over which has to pay up.

Some companies, such as Allstate, require you to have your auto and homeowners policies with them before they will sell you an umbrella. Policyholders must maintain a minimum level of liability coverage under their primary insurance: $100,000, say, for homeowners and $300,000 for auto liability, although more and more insurers are requiring at least $500,000 in coverage.

Your insurance options may be limited if you fit certain profiles. A high percentage of umbrella claims are auto-related--90 percent, for instance, at State Farm, and 70 percent at Allstate. So people with bad driving records or who are in assigned-risk programs for their primary auto coverage might have trouble getting an umbrella policy.

If you fall into one of those categories, your best course is to get a stand-alone umbrella policy from the few companies that will write one, such as RLI, an insurer based in Peoria, Illinois. Failing that, simply increasing the liability limits on your auto and homeowners policies will give you some protection.

Also undesirable from insurers' point of view are people who have already been sued successfully. "If someone has had two judgments against them for defamation, we're probably not going to insure them," says Allstate's Cripe.
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Re: Ducking Under an Umbrella

Postby Van Canna » Tue Dec 05, 2017 4:51 pm

If you have reasonably clean driving and legal records, however, you should have no trouble finding an insurer that is willing to provide the breadth of umbrella coverage you want. And once you're insured, disputes over claims are rare. Those that have occurred mostly concern a few issues.

"We see late-notice problems," says Gene Anderson, an attorney with the New York law firm Anderson, Kill & Olick, which handles disputes between insurers and policyholders.

"Someone will have a little fender bender and not bother to tell their insurer, and six months later they get sued for $1 million. The umbrella carrier tells them, 'You should have given us notice the day the fender was bent.' It varies from state to state whether we can get those claims paid."

The other disputes that Anderson cites concern the extent of the "business activities" exclusion. This is a hazy area.

Although a full-time pursuit clearly isn't covered under an umbrella policy (for that, you need commercial or business insurance) and a one-time garage sale just as clearly is, the middle ground is open to question.

Your best course is to clarify with the insurer when you buy your policy just how much of your business life is covered. That way the company can't wiggle out of a claim later.

It's impossible, of course, to cover every conceivable contingency. But for a few hundred dollars a year, you can shield more than a $1 million of your assets from plaintiffs and their lawyers. Remember, you don't have to be a millionaire to be sued for a million.
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