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Does Your Umbrella Have You Covered?

Does Your Umbrella Have You Covered?

October 25, 2017
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I am the family member that cleans out our cars and I'm lovingly criticized by my wife afterwards because she says she can never find her umbrella when I’m done. Seems like I have an uncanny ability to "hide" it just before the liquid sunshine greets her getting out of the car. When it rains, it's always helpful to have that handy umbrella ready to shield you from the elements.

Now imagine a nice sunny day that you're out enjoying and the perfect song is playing on the radio. Out of nowhere, the car in front of you slams on breaks and you don't notice quick enough. Boom. That must be the worst noise ever, and somehow things seem to move in slow motion. A car wreck is bad enough, but you then realize the person in front of you is hurt...badly. They’re injured so much that you know an ambulance needs to be on the scene...and quickly. Your world went from "all good" to "oh no.” You now have two damaged cars along with an injured person, thanks to you. When it rains, sometimes, it pours.

Thankfully, an umbrella liability policy is something that shields you and your balance sheet from these storms of life. The concept of an excess liability policy was foreign to me until 20 years ago when my advisor recommended I add one. The concept seemed simple enough - for a few dollars a month, I could add $1,000,000 of additional liability protection to my auto and home insurance policies in the event of an accident or lawsuit more than my normal liability limits. Easy enough. Right?

My buddy Bob is a pretty successful guy. Great family, successful in business and candidly, life was rolling along in a good way. Then one day he got a phone call. His daughter, (a student in college) was in an automobile accident in which she hit someone crossing the street on campus ultimately injuring the student. Immediately, Bob wanted to know the following: Are you okay? Is he/she okay? His daughter was in fact alright, but the student she hit suffered injuries that went beyond a bruise or a broken bone. In fact, Bob, though no fault of his own, was now in a lawsuit and the number was in the seven figures. How would he deal with this? Who should he call? Fortunately, he had an excess liability policy that protected him and his net worth. The insurance company provided the attorneys because they were defending their money at risk. Ultimately, a settlement was reached and the hurt student is now healed back to normal health despite the long road to recovery. The umbrella policy literally deflected a potentially devastating blow to Bob's net worth. In fact, the only financial loss was his deductible on the auto policy.

When the storms of life occur, either you will be protected or not protected. Adding an umbrella policy might just save the day and is such an inexpensive way to protect your balance sheet and future earnings.

Now, if I only I could remember to put my wife’s umbrella back in her car when I’m done…