Do You Need an Umbrella Insurance Policy?

An umbrella insurance policy is a type of excess liability coverage that works in addition to and in conjunction with all of your other insurance policies that contain liability protection. This includes your automobile, homeowner’s (or renter’s) insurance as well as your business insurance coverage. The primary purpose of umbrella insurance is to protect your assets. If you are found to be liable in causing bodily injury, death or property damage to another, your umbrella insurance is there to cover the financial costs arising from that liability once your primary insurance policy liability coverage has been exhausted. Here are some examples:

• You’re involved in a vehicle accident for which you are found to be at fault and are held liable. Three other cars are involved and, besides all being damaged, some of the other drivers and passengers are seriously injured. The cost of their medical bills, rehabilitation, loss of income now and in the future, plus the cost of repairing their vehicles far exceeds the liability coverage limits on your auto insurance policy. In this situation, an umbrella policy will take over once your car insurance limits have been reached and will pay up to its policy limits.
• Someone visiting your home trips and falls because of a broken stair step and breaks their neck, causing them to become paralyzed. You’re held responsible for the cost of all their medical bills plus a lifetime of being wheelchair-bound and being unable to work. This far exceeds the liability protection limits on your homeowner’s insurance policy, but an umbrella policy takes over and is able to protect your assets from being taken to pay the settlement.

Who Needs Umbrella Coverage

If you own assets that you’ve taken a lifetime to acquire and their sudden disappearance would cause you hardship, you should consider the protection of umbrella coverage. This includes:

• Cars
• Homes
• Properties
• Personal Possessions
• Stocks and bonds
• Savings and other bank accounts
• Retirement accounts
• Future earnings potential

All of these could conceivably be gone in an instant should you be unfortunate enough to suffer responsibility for a liability scenario such as those described above. Even if your total assets haven't yet become impressively large, some liability lawsuit judgements even penalize your future earning power, which would be financially devastating. A typical umbrella insurance policy with a one-million dollar limit may only cost you a few hundred dollars per year. Consider the risk/reward.   

Disaster Insurance: How to Be Ready for the Worst Case Scenario

Whether floods, hurricanes, tornadoes, wildfires or earthquakes, different types of disasters have affected North Carolina in the past and will continue to do so in the future. While our area here in the Triad Region is fairly exempt from wildfires or earthquakes, hurricanes and floods are an ever-present danger and the only way to get ready for when they strike is to be proactive in your preparation. This includes readying your home or business structurally for the advent of any likely disaster scenarios, having sufficient equipment and supplies in place to exist safely if such an event occurs and being covered by the proper type and amount of disaster insurance to help in rebuilding in the aftermath of a suffered disaster.

Evaluating your exposure to potential disasters such as floods can be accomplished by determining your proximity to flood plains in your local area. Since most homeowner’s insurance policies don’t cover flood damage, you’ll have to make a decision whether or not to acquire flood insurance in addition to your regular coverage. Remember, just because you don’t live within a flood plain area doesn’t mean you can’t be subjected to flood damage.

Review Your Disaster Insurance Coverage

Get together with your insurance agent and determine whether the coverage you have is sufficient and that you understand what coverage you have in place. If you own a business you may want to look into obtaining business interruption insurance. This can help you meet your expenses in the event that a disaster forces you to temporarily close your business. Statistics show that approximately 25% of the businesses that are forced to close due to a disaster of some type never reopen.

One common disaster that’s typically covered by your homeowner’s or business insurance policies is fire. It’s not uncommon for those who fall victim to a devastating fire to learn that some objects they own such as high-priced jewelry or artwork may not be fully covered in the event that they become destroyed. Check your policy limits on these types of things, which may also include furs, silverware and various expensive collectibles like coins and stamps. If the coverage falls short of the appraised value of these items make sure you obtain an endorsement or rider to extend your coverage to higher amounts. An annual or bi-annual consultation with your insurance agent is always a good idea to keep your policies current.   

Do You Need Additional Car Insurance When Renting a Car?

If you have occasion to utilize the services of a car rental company you’ll likely face the decision of whether or not to buy the supplemental car insurance coverage offered. The salesperson writing up your rental contract may highlight the importance of buying this insurance, which may include:

• A loss-damage or collision-damage waiver which, although not technically insurance, protects you from financial loss should your rental car become damaged or stolen
• Liability protection in case you cause bodily injury or property damage to a third person
• Personal injury accident protection, which covers you and your passengers in the event you’re involved in an accident and medical services are required. This covers medical costs, ambulance costs and includes death benefits
• Loss of personal effects protection, which covers your personal property in the event that anything is stolen from your rental car

Don’t Buy What You Already Have

Although typically recommended by most rental car salespeople, you’ll find in most cases that their car insurance policies are redundant because you already have similar coverage as part of your personal car insurance or homeowner’s insurance policies. One thing the car rental company has going for it, however, is that many of their customers have no idea exactly what coverage they already have. In an effort to be safe rather than sorry, you may feel the need to buy additional protection.

The best idea for you is to read through your car insurance policy to see exactly what coverage you have that applies to rental cars. If your personal vehicle insurance coverage includes collision and comprehensive, this will likely cover rental cars too. Your personal policy definitely covers liability (since this is required by law here in NC), but if you don’t have car insurance because you don’t own a car you should buy the liability coverage.

Supplemental personal injury insurance shouldn’t be needed if you have a good health insurance policy and death benefits would be covered by your life insurance policy if you have one of these. Finally, protection for your personal property is likely provided under your homeowner’s insurance policy.

Credit Card Coverage

Lastly, when you pay for your rental car with a major credit card, which most companies require, you may have built-in coverage with your card (although this may vary from one card to another). Check it out. If you have questions, call your credit card and insurance reps for clarification.