Let’s forget the stock market for a moment. The events of our daily lives, not Wall Street, may determine our financial security or ruin.
Let’s just suppose, your teenage student has a grudge against a high school teacher and begins a smear campaign on social media. Due to the false statements and following public humiliation and damage to his career, the teacher sues the student’s parents for defamation of character, and wins.
Hypothetical? Actually, no. In a similar story, a slandered teacher was given a six-figure judgement. Do you have an extra $400,000 to back up your child’s reckless tweets or Facebook posts?
More front-of-mind, we worry about the liability of a visitor to our home slipping on an icy porch, or a neighbor’s child being injured in a tree-house or backyard pool. We could let our imagination run wild: You might cause a five-car pile-up on a snowy road, but your auto insurance’s liability coverage is not high enough to cover all five accident victims’ medical bills. Or, you might absentmindedly send peanut butter and jelly sandwiches to your daughter’s classroom for a field trip lunch – a student with a severe nut allergy becomes sick and the parents sue you. A teenager throws a wild party at your house while you are out of town and a party-goer is later arrested for drunk driving. You get the picture.
Of course, if you are a recent college graduate, renting an apartment, driving a jalopy, and currently job-searching, you are not a likely target of a huge lawsuit. However, if you have wealth: savings, property, investments, etc., you are at risk of losing everything you have worked so hard to accumulate.
Enter umbrella insurance
How can we build protection around our financial plans? Enter umbrella insurance, a type of personal liability insurance that can be vitally important if you are found liable for a claim larger than your auto, boat or homeowner’s internal liability limits. Furthermore, umbrella liability insurance may cover claims such as libel or slander or malicious prosecution. Very importantly, an umbrella liability policy covers not just the policyholder, but also other members of a family.
Let’s face it, we live in a lawsuit-happy world. Jury awards can easily exceed $1 million.
Fortunately, you might spend only $300 annually, more or less, to purchase a $1 million umbrella liability policy.
I remember an old television commercial (product forgotten) that promised a money-back guarantee so the pitchman’s slogan was, “What have you got to lose?” When it comes to personal liability, the answer to the question is simple: everything. Accidents happen, and bad decisions occur, so call your property and casualty agent to get properly insured.