Umbrella Insurance – What it is and why it’s needed

What is Umbrella insurance?

Umbrella insurance refers to a liability insurance policy that protects the assets and future income of the named insured by providing protections above and beyond what his or her home and auto policies provide.  Simply put, for those who purchase it, umbrella insurance protects their homes, assets, income and businesses.  Umbrella insurance is different from from excess insurance in that excess coverage goes into effect only when all underlying polices are totally exhausted, while Umbrella is able to “drop down” to fill coverage gaps in underlying polices. Umbrella insurance can cover medical bills, legal expenses and personal injury claims.

Umbrella insurance goes beyond just home, boat and auto accidents. It provides additional liability safeguards above what one would consider normal claims. Umbrella insurance can also provide coverage for but not limited to: false arrest, libel, slander, and Invasion of privacy. As stated before, umbrella insurance is an extra liability insurance that can protect one from being sued.

There are liability insurance policies that are offered and often required for those who own homes and/or drive cars . However, many people carry only the minimum that is required by their state, which in West Virginia is only $20,000 for each bodily injury claim up to a total of $40,000 per accident.  These minimum insurance amounts often don’t come close to equaling the value of an accident claim, especially claims involving serious injury.

In serious injury cases, a car or home owner’s future income and assets are at risk because a claimant can seek a judgment against the insured and then seek to garnish the insured’s wages.  Umbrella insurance is great for small businesses owners as well because if someone files an auto or premises liability claim against the business owner, the assets of the business owner, including the the business itself, are at risk.

Umbrella insurance is relatively cheap

Research shows that many people with major assets either do not buy umbrella coverage or do not buy enough of it. Some people do not even know they have the option to purchase umbrella insurance. The cost of an umbrella policy is usually a fraction of the price of a typical home or auto insurance policy.  For example, I was recently quoted a one million dollar Policy for only $350 per year. For each additional million dollars in coverage I wanted, I only had to pay about $100 per year.

Mark Schussel, a spokesman for the Chubb Group Insurance Companies, stated “This is a neglected area.” “Some people have some coverage. But they haven’t changed the amount in years. Some people have a million dollar figure on their heads, and it just doesn’t make sense anymore.”

Rick Blank, an agent with the Preferred Service Group in White Plains, N.Y. stated, “ You never think it is going to happen to you,” “If you don’t have enough insurance you become personally liable.”

Here is an example.  One of Mr. Cox’s children was driving the family car when he crashed into another car while talking on a cell phone. A woman and a child were critically injured. Mr. Cox only had the minimum auto insurance policy required by West Virginia law, which means there is only $20,000 in insurance available for the woman’s personal injury claim and $20,000 for the child’s personal injury claim – not nearly enough to even pay for their medical bills.  The woman and child sue Mr. Cox and come after his home, business, and other assets, and seek to garnish his wages.  However, Mr. Cox has a $5 million dollar umbrella insurance policy. Mr. Cox’s umbrella insurance carrier then settled the claims for $2 million dollars and paid all of Mr. Cox’s legal fees.

This was a good result for everybody.  Mr. Cox’s assets and income were protected.  The injured child and mother got fair compensation and got their medical bills paid.  As a result, the community benefited because it was not forced to pay for the mother and child’s medical care that was paid by Mr. Cox’s umbrella insurance.

Ask a West Virginia personal injury attorney

If you have been injured in a West Virginia car accident or due to another’s negligence and would like to speak with a personal injury lawyer about your rights and options, call West Law Firm, L.C., toll free at 1-877-943-9378.  We are a personal injury law firm located in Charleston, West Virginia, and serve clients throughout the State.

Brooks West, Esq.

Brooks West is a West Virginia personal injury lawyer who helps people who have been injured by negligence or wrongful conduct. He is the President and founder of West Law Firm and has been an attorney since 2005. Brooks is a Multi-Million Dollar Advocates Forum member and has been awarded the AV Preeminent Rating from Martindale-Hubbell.