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What is Umbrella Insurance?

In today's economy, everyone is trying to cut cost and save money. Why would I want to add another insurance policy? Shouldn't my home and auto policy be enough? Unfortunately, not in the world we live in today. We live in a very litigious country where large lawsuits are common, and Ohio is no exception.

Lawsuits can arise from unlikely sources that most would never consider a possibility. Below are just a few examples of claim situations that while seemingly unlikely, occur every day across the country.

Example #1: A babysitter left a 5 month old infant unattended in a walker. The infant toppled the walker, struck her head on the floor and suffered brain damage. The parents of the infant sued the teenage babysitter and her parents. The court awarded the infant's parents $11,000,000.

Example #2: The insured's 18 year old son was driving the insured's car on a short trip to the store with his girlfriend. He lost control of the car and struck a tree. The insured's son told the police that a vehicle cut him off, but there were no witnesses and no evidence of any impact with another car. His girlfriend, a 19 year old college student, was hospitalized for over a month with multiple fractures and internal injuries. She was in a wheelchair, but is now able to walk with crutches and continues with physical therapy. She has a right drop foot as a result of the injuries. The insured's personal umbrella policy limit was paid to cover expenses incurred from the accident.

Example #3: An insured's daughter hated math class, as well as the teacher. The daughter made several "disparaging" and false remarks about the teacher online. The teacher sued the parents for personal injury and $750,000 was paid.

Example #4: The insured permitted her children and several of their friends to play paintball in her large backyard. The children were experienced and advised of all safety rules, including the use of headgear at all times. A participant removed her headgear as she was leaving the field in order to hear someone calling her name. The minor claimant was hit in the eye, resulting in a $475,000 settlement.

What assets are at stake? Without proper coverage, all of the following could fall prey to claims payments: Personal Property, Real Estate, Investments, Retirement Accounts, Liquid Assets, and Future Income.

So, how does an Umbrella policy work? It goes above and beyond coverage on a home or auto policy, to protect the insured from excess liability. There are generally two types of "umbrella coverage":

The most common is what's known as an Excess Policy. Simply put, it follows the coverage form of the underlying auto or home policy. If the loss is not covered under those policies, it's not covered under the Excess Policy. In most cases, the Excess Policy is written by the same company that writes the auto and home policy.

The other type is a true Umbrella Policy. It includes the coverage found in the excess and usually adds coverage for False Arrest, Libel, Slander, and Invasion of Privacy. This type of policy can be written with a different company than the auto and home coverage.

Both Umbrella and Excess policies are priced about the same. Prices start at around $150 a year. Limits generally start at $1 million and go up to $5 million in coverage. They cover everyone who lives in your home. For the extra coverage that's provided, coupled with a price less than a cup of coffee a day, it's a coverage we recommend to everyone.

We are here to help you protect what you've worked hard to earn. Call us at 740-642-3333 to talk about your umbrella insurance options!

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