The Importance of Having Liability Coverage

I want to share with you one of the best moves you can make to ensure that you’re protected when the last thing you ever imagined happening, happens

An umbrella and/or excess policy is not just for affluent individuals and families—it’s something that every family should have.
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We talk a lot about managing risk in your portfolios here at The Johnston Group but some risks pop up in areas where you might least expect them. We can help you protect your assets and identify property and casualty risks along with taking steps to protect you from those risks.

Especially with summer coming, let’s take a minute to imagine a catastrophic loss and a practical way to prepare for it. Imagine that backyard trampoline, swimming pool or boat on your lake could pose major financial risks. One of your friend’s children is severely injured while on your property. The child’s parents sue you for $2 million in medical damages and negligence and they collect. You have $100,000 in homeowner’s liability coverage and a $1 million umbrella policy to cover losses over the policy limit. Because your insurance covers only $1.1 million of the $2 million in losses- not to mention hefty legal fees of $500,000 over the course of the lengthy case- you must come up with the remaining $1.4 million.

Or imagine you’re sued for libel or slander, including cases originating from social networks, websites or blogs. It can be financially devastating. If you don’t have insurance, or when the insurance limit runs out, the courts will then look to your savings, investments, real estate, valuable collections and future employment earnings to pay for the remaining amount of the claim.

Any household with home and autos should carry a minimum $1 million umbrella policy...

These are the types of moments that we don’t see coming, but when they do, we’re incredibly relieved to have the means to handle them. This is where a personal umbrella policy comes in. It is truly one of the least expensive but most important insurance policies you can buy. 

This policy provides high limits of liability to protect you, your family and your personal assets against a catastrophic loss. An umbrella policy will pay after your homeowners or personal auto policy limits have been exhausted. Any household with home and autos should carry a minimum $1 million umbrella policy, also referred to as an excess policy. 

An umbrella and/or excess policy is not just for affluent individuals and families—it’s something that every family should have. It is important to partner with the right insurance advisor, review policy limits as wealth accumulates and make appropriate adjustments. We have seen clients pay just a few dollars more a month when adding an umbrella policy to their homeowners and auto policies. And for high net-worth clients, note that there are specific companies that offer additional benefits.

If after reading this you have further questions, feel free to contact Maggie, Ty or other Johnston Group team members to have us help you prepare an up-to-date needs analysis.