Do you need a Liability Umbrella policy?
Let’s get the statistics on the table right now. I’m an insurance nerd…I love statistics.
There are a lot of different stats to choose from, but to give you a sense of the volume of lawsuits in Oklahoma, consider this;
The average number of lawsuits filed just in Oklahoma County is between 300 and 500 per month.
Liability insurance is something most people are familiar with. If you own a car you must carry an Oklahoma liability insurance policy because it’s required by law.
If you hurt someone or smash someone’s car or property, your car liability coverage would help you pay for those costs.
Liability insurance protects your assets from being taken to pay for damage or injuries you cause.
What exactly are the “assets” you are at risk of losing in a liability claim?
- Do you have an income? There is asset NUMBER ONE.
- Do you have any savings account? There is asset NUMBER TWO.
- Do you own any “real property”, like a house, car, furniture, etc? There is asset NUMBER THREE.
Who needs a liability umbrella policy in Oklahoma?
You may think that you would never be sued because you do not consider yourself “rich”. You can’t get blood from a turnip, right?
If someone that has very little income or assets causes injury or damage, it’s unlikely that a lawsuit would be able to wring anything additional from them.
On the other hand, if a person that causes injury or damage does have assets, they should expect themselves to be fair-game.
This may not seem fair. But that’s not the point. This is the reality we live in.
Say you’re young, single, broke, renting and healthy. Losing everything you own would still be terrible, but you’d likely recover… eventually.
On the other hand, if you have a job, own a car or house, you should consider your need for a liability umbrella.
Some factors to consider when determining your need for a liability umbrella policy:
- Your Total Assets
Calculate the total value of your assets – things like your home, car, savings, and investments.
- Your Future Income
If someone sues you and gets a judgment that exceeds your liability insurance coverage, your future earnings may also be on the line, and could be garnished to pay the judgement against you.
To address this, consider multiplying your income by five and adding that amount to your asset total.
- Your Real risks
If you have teenage drivers in your house, you have a real risk. Statistics tell us they will be in at least one wreck between the ages of 16 and 19. Plus, it is highly likely that it will be their fault.
Other real risks are owning a dog, having a swimming pool, trampoline, or basketball goal on your property. These real risks don’t make you rich, they give you more opportunities and greater exposure to a liability loss.
Social Media participation is not something most people would associate with a liability exposure. Making derogatory statements about companies or individuals can lead to legal action.
- Perception vs. Reality
If you have a profession in which the perception is that you have assets and a good income, you should consider purchasing a liability umbrella policy. Not all doctors, lawyers, and bankers are wealthy. But that is the perception. What you have, you want to protect.
Okay, you know you need a liability umbrella policy, but how much coverage do you actually need?
Remember the total assets and future income factors from above? If your total household earnings are $100,000 a year, and you have $500,000 in assets to protect, you may want a $1 million policy. You’d almost certainly want umbrella coverage.
What’s this going to cost?
According to the Insurance Information Institute, a $1million liability umbrella policy costs between $150 and $300 per year. However, it depends on the exposures to be covered.
The cost can be reduced by bundling the policy with your home and car insurance carrier. The biggest expense could be from not having a policy when you need it.
The information contained in this page is provided for general informational purposes only. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk.