As many of us who live and work in Boulder have recently been reminded, it’s not until disaster strikes that we actually learn how effective our insurance coverage is. This is especially true when the event we are insuring against is relatively rare, such as a 100-year flood.
Another situation which is also rare but, again, potentially devastating is being named the defendant in a liability lawsuit. Although emotionally traumatic, this situation does not necessarily have to become financially traumatic, as there is an effective and relatively inexpensive tool available to you.
A personal liability insurance policy, also called an umbrella policy, is the last line of defense against lawsuits. It is used to pay claims, up to the amount covered, when other insurance has reached it limits. And since these situations are somewhat rare, the premium is quite inexpensive. For example, the typical premium for $1million of coverage is about $500 a year, although it can run higher if you have a lifestyle that exposes you to greater risks.
Umbrella coverage is especially important for families with significant assets to protect – our clients – and we recommend at least a basic $1million policy for everyone with assets at or above this level. The best place to start is with the agent who currently handles your home and automobile insurance. We have attached a recent New York Times article that provides more information on this topic.
As a primary “risk manager” for our clients, we would be happy to discuss this issue with you further and to assist you in any way we can.
-Drew Simon, Principal