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Why You Need Umbrella Insurance

By October 15, 2012June 9th, 2020No Comments

Umbrellas: Guarding Yourself from Far More Than Stormy Weather

Successful entrepreneurs, owners of successful small and medium sized businesses and those who are fortunate enough to have accumulated wealth often fail to realize they are not carrying enough auto, homeowners or business liability insurance to protect them fully against liability.

Those with a lot to lose from a disabling injury or fatality are likely to have insurance liability limits that are too low. The most cost-effective way to fill this dangerous gap in insurance coverage is with an “umbrella insurance liability policy”, or as it’s referred to in most cases, umbrella insurance.

Imagine that the owner of a late model luxury car is in an accident with the driver of an eight-year old compact car. The police report indicates that luxury car owner was at fault. The driver of the other car is warehouse worker who suffers a disabling back injury. The insurance limits for the luxury car are moderate; $100,000 per person and $300,000 per incident. This means that the most the insurance will pay this injured person is $100,000. Consequently, he decides to sue the luxury car owner for $5 million to compensate him for future lost earnings. What if he wins?

That individual might be forced to sell their home, business or stocks. Maybe all of them. But, if that driver had an umbrella policy with a $5 million limit there would be coverage for the full loss – and the policy only costs a few hundred dollars per year.

Imagine that the sole owner of a business which is new and not incorporated is a general contractor. As a general contractor he has several trucks in the field. One of the trucks is involved in an accident that results in a fatality. He and the business are sued for $3 million. The person killed in the accident was a retired woman in her early 70s and her only survivor was her adult daughter. The company’s auto liability policy has limits up to $1 million/$3 million. What if the victim’s daughter wins?

The business might have to be liquidated and the business owner’s home sold. If that will not cover the loss the business owner may have to declare bankruptcy. All of this could have been prevented with a personal liability insurance policy with limits designed to protect both the business and the business owner.

Even if business owners protected by their business being a corporation or LLC, the business is in danger itself without an all peril liability policy. The business assets are vulnerable and bankruptcy may be forced on the company – this can very well endanger the owner’s economic future. Business umbrella insurance is available at affordable rates and is deductible.

Companies with a great deal to lose must sit down with an insurance agent to protect themselves from situations where they might be exposed to great loss. No one wants to be at fault for a devastating accident. However, it is foolish not to spend the comparatively small amount on umbrella insurance when a person’s economic situation could be endangered. Speak with an insurance agent now by calling 405-530-4019 for an Edmond umbrella insurance quote.