Lowering Your Liability

What if you were involved in an auto accident and you’re sued under your auto insurance policy? What if your neighbor slips and falls on your property, and you’re sued under your homeowners insurance? What if you experience a natural disaster in which another person’s property is damaged by a tree from your property?

You may think you’re covered, but it may not quite be enough. Typically, auto and homeowners policies contain some liability insurance for settling legal claims. But let’s say a settlement—or a judgment—should a matter go to court, is $800,000 and you only have $300,000 of liability insurance. Where does the remaining $500,000 come from? The answer is “you,” and you may lose everything to pay off the debt (some states protect certain assets, such as your home, from seizure). This is where an umbrella liability policy, which augments auto and homeowners insurance, comes into play.

For relatively little outlay—generally under $300 for each $1 million in coverage—you can get an umbrella policy that can pay $1 million, $2 million and sometimes even $5 million or more of a claim, on top of what your basic policies cover. Umbrella liability policies usually carry a high deductible, perhaps $300,000 or more, as they’re not designed to kick in until your other policies are tapped out.

Generally, they require that you have homeowners and auto liability insurance equal to the amount of your deductible. You can usually set the amount you need and the cost is driven by the amount of coverage you’re after, your personal risk factors (i.e., the number of traffic tickets you had in the past few years or your credit score) and other criteria used by the insurer. It also makes sense to try to obtain your auto, homeowners and umbrella liability policies from the same organization, as you can often get a premium discount and, should anything happen, it’s easier to deal with a single entity.

Sources: “Umbrella Policies Plug Holes in Your Liability,” MSNMoney

Salem Five Resource

Putting a Lid on Liability

Whether it’s personal or business, Salem Five Boyle Insurance Services (SFBIS) is the one source for all your insurance needs. We offer a wide range of insurance products and
services to help you realize your short- and long-term financial needs by planning for
and managing any potential risks. Among the ways to maximize your insurance protection is via an umbrella liability policy. Sale Five offers both commercial and personal umbrella policies.

Commercial

• Liability premises and operations
• Liability products/completed work
• Auto liability
• Employers liability
• Garage liability

You can opt to include other miscellaneous underlying liability coverage, subject to insurance company underwriting guidelines.

Personal

• Personal injury lawsuits