OWN A HOME? BOOST YOUR INSURANCE COVERAGE

A lot has been written about the importance of protecting one's financial future against loss by purchasing an excess liability umbrella insurance policy. After all, one in five liability lawsuits are settled for well over $300,000.  The evidence is irrefutable....every adult who owns a motorized vehicle and/or owns or leases a place to live needs an umbrella liability policy.  That being the case, the next logical question is, how much umbrella coverage does one need to purchase?  Unfortunately there is no definitive answer.  The general rule of thumb is "cover your net worth," however, as you will see below, this cannot be the only measure.  There are many other factors that must be carefully considered from a risk management basis when choosing an amount of umbrella coverage.   Here are a few areas to consider:

 
 

Ø      Your future earning potential.

 
 

Regardless of your current net worth your future earning potential could be significant.  If you are found liable for injury to another and were short on your coverage, you could have your wages garnished and paid to the injured party for years to come.

 
 

Ø      Your hobbies and social activities.

 
 

Certain hobbies or activities can substantially increase your liability.  Golf, for example, surprisingly causes frequent injuries.  Hardly a golf season goes by without a cart accident or someone striking another with a golf ball.  Should you be unlucky enough to hit someone else with a golf ball, the results could be financially devastating.  Other "high liability" activities include hunting, casual racecar driving, and fishing tournaments.

 
 

Ø      Your possessions.

 
 

Multiple properties as well as many "toys" that are owned can drastically increase your liability exposure.  Multiple properties carry higher exposure primarily due to the simple increase of "exposed" land.  Also, vacation homes, cabins, etc. are often "loaned" to friends and family and the exposure to injury on the property increases dramatically.

 
 

Toys such as jet skis, snowmobiles, ATV's, boats, and high performance vehicles are all liability increasing exposures.  In fact, the majority of severe bodily injury claims occur due to the use of these vehicles. 

  
 

Ø      Clubs you belong to.

           
 

If you purchase stock in a private club you have just assumed a substantial amount of liability exposure.  As a shareholder, you are subject to assessments from the club for any shortage in insurance proceeds for a claim of bodily injury or property damage against the club.

 
 

Ø      Swimming pools.

 
 

Swimming pools account for more home liability claims than any other type of loss with the exception of dog bites.  While pools are inherently dangerous on their own, diving boards and water slides increase the exposure dramatically.

 
 

Ø      Dog bites.

 
 

Dog bite claims account for more personal liability claims than any other exposure.  With the substantial increase in dog ownership in the U.S., the number and size of dog bite claims is increasing dramatically.

 
 

Ø      Boards of Directors

 
 

Whether the Board(s) you sit on is non-profit or for-profit your personal wealth is at risk.  Should there be a non-covered or under- funded loss to the organization, members of the Board of Directors are typically held personally liable.  This exposure is potentially enormous.

 
 

Ø      Children

 
 

Without a doubt, children represent an extraordinary exposure increase.  Persons under the age of 24 operating an automobile or any other type of motorized vehicle, account for the vast majority of large, tragic accidents.  If that weren't bad enough, the newest exposure, lawsuits stemming from "toxic" postings on social networks, have increased in both number and size of "damages."

 
 

Ø      You

                 
 

Whether you are an entertainment, sports, or other type of celebrity or if you are simply a relative of a celebrity, lawsuits that involve you just grew dramatically.  People with celebrity status suffer more frequent and larger lawsuits because they are perceived to be wealthy.

 
 

 
 

Obviously, no one can ever accurately determine your exposures and the amount of umbrella coverage to purchase.  The above is simply a guide; however, please pay close attention to your own personal profile.  As you can tell by the statistic above, umbrella claims occur rather frequently.  Don't be caught short!