Umbrellas Aren't Just For Rainy Days

I don’t think it’s a secret that we live in a world full of sue-happy people. There is an overwhelming belief among many that the world owes them something and they are going to get it (and by “world” that could mean you). Don’t agree?  Have you heard about the case a former McDonalds employee brought against McDonalds because he claims that working there made him fat?  Apparently he never thought about making a salad at home and bringing it to work.  Or the lawsuits against cigarette companies because life-long smokers ended up with lung cancer (isn’t it common knowledge that smoking isn’t good for you)? The bottom line is that there are more and more people that don’t take responsibility for themselves or their actions, and try to shift the blame (often with success) to others.  So if we can establish that people have found success in placing blame with others in these extreme examples, why would we ever allow ourselves to be exposed to the common, legitimate claims that occur all the time?

Before I get into a few examples that may be a little more real to everyday life, it’s important to understand how an umbrella works and what it would be protecting. An umbrella is simply an extension of the liability insurance you already purchase in your auto, home, or business insurance policy.  It helps you build a wall of protection around your assets and earning ability.  The umbrella would kick in once you have exhausted the limits purchased in your primary policy.

It’s also important to know that umbrella policies aren’t just for “the rich”. Us “common” folk that own a home, have a college savings for your kids, or retirement investments have just as much at stake.  These things are just a few of the things that could be fair-game if you are ever found in the middle of a claim where it is determined you are at-fault. Don’t have any of these things?  Enter your future earning ability. Yes, that’s right. Even if you don’t have much now, a settlement that includes future payments or wage garnishment will make sure you don’t have these things in the future. I’m not trying to be a “glass is half empty” type of guy.  I simply want to make sure that possible realities are understood.  Let’s look at a few examples that are a little more realistic to everyday life.  Situations where an umbrella may come in handy.

I was driving down the road in April on a normal Northwest spring day (raining).  Since rain is part of the normal life around here we really don’t think much of it.  In the blink of an eye we hit a hailstorm.  Everything happened so fast there was no time to react before we found ourselves in a flat spin on the freeway at 65 miles per hour! I would compare this to walking on your kitchen floor, then stepping on a bunch of marbles. We came to a stop after colliding with the guard rail on the side of the road, and a slide of about 200 feet.  Fortunately we didn’t hit another car and no one was seriously hurt.  But… what if?  What if someone had been on the side of the road changing a tire? What if the guard rail wasn’t there and we had gone into oncoming traffic?  The scenarios are endless!

Have you ever hosted a party at your house or business where alcohol was served?  What if someone left your party where you served alcohol, and wound up in an accident where they were at fault? Could you be sued? If the mailman came up your walkway and slipped on some ice or tripped on a hose, would you be liable?  While these examples may be considered accidents, they are still situations where someone will be determined to be at-fault.

Certainly, the odds would suggest that the chances of ever being in a situation where you need this extra protection are slim.  But if you are playing the odds then you’re a gambler- and a gambler can always lose more than he may win.  When it comes to the decision of whether or not to carry an umbrella, there isn’t really much to win by choosing not to- but there is potentially a lot to lose.

If you don’t have an umbrella and you have the perception that you can’t afford it, allow me to squash that thought for you.  Did you know that you can get a 1 million dollar umbrella for as low as $150 a year? I understand that even $150 can be a lot for some people these days- so here’s another suggestion.  Talk to your insurance agent about your deductibles.  If your deductibles are at $500 a year, make them $1000 (or even $1500 on your home).  This simple adjustment will change the premiums you are already paying enough to cover most, or all, of the added cost for the umbrella.  Now you aren’t spending extra money for this coverage, you are simply re-allocating the insurance dollars you are already spending. I would much rather worry about how to cover the $1000 deductible, rather than how to pay for the balance of the $600,000 lawsuit.  Wouldn’t you?

 (The coverage you need in your umbrella should be determined through a conversation with your agent.  While 1 million would be enough for most people, it isn't necessarily enough for all)