Why You Should Consider a Personal Liability Umbrella

My father is part-owner of an apartment complex where tenants are not permitted to have pets. The complex was sued by a woman who was bitten by a dog that was owned by a friend of a tenant, and the bite happened in a park across the street from the apartments.

No way she’d win, right?

Wrong.

It burns me. It really burns me. The woman’s attorney successfully argued that because a brochure for the apartment complex had a picture of the park and mentioned that it was across the street from the apartments that the complex made it a defacto part of the complex. The woman was award over $300,000 for a very minor bite, plus attorney fees.

It is just so wrong, on so many different levels.

But that’s a corporation, right? Not something us individuals need to worry about, is it?

I think we do need to worry about it.

We live in a litigious society (though I have high hopes that somewhere, perhaps in Utah, it may be slightly less litigious than it is here in South Florida). In the first five minutes after I met one of my neighbors she mentioned three people she was suing (you can bet she has never been invited inside my house!).

The example I gave is of a corporation that got shafted, but ordinary citizens have to defend themselves against lawsuits every day of the week.

Everyone knows about cases like these:

  • Kids Play – One person kneels behind another and a third pushes the “victim” over. In a recent case three 10-year olds were the players. One child broke his arm and the other two were sued. The case cost the kneeling boy $100,000 and the one who did the pushing $195,000.
  • The Clumsy Worker – A 40-year-old window washer broke his heel in a fall after a downspout he was holding onto broke away from the house on which he was working. Although the worker was found partially responsible, the fall cost the homeowner $1.2 million.
  • The Accidental Athlete – A 22-year old suffered permanent eye damage when he was struck by a golf
    ball. He sued claiming that the golfer who hit the ball had failed to look out for other players. The errant shot cost the golfer $160,000.
  • Not-So-Funny Ski Bunny – A professional dancer suffered permanent knee damage — an end to her
    career—when she was knocked down on a beginner’s ski slope. She offered to settle for the $300,000 covered by the defendant’s insurance, but was rebuffed. The case went to trial, where it cost the defendant $2.2 million.
  • Pool Tragedy – At an end-of-school swim party, a 16-year old dove and hit his head on the bottom of the pool. He became a quadriplegic, and the case resulted in a $1.5 million settlement against the homeowner.

Then there are the car accidents where someone is seriously, permanently injured, or the damage to the house down the street when your kid throws three dozen eggs at it on Mischief Night.

Horrible things. Such tragedies.

If I’m responsible I want to have the money to help people who are hurt – it’s the right thing to do. And if it’s a frivolous lawsuit I want to be able to defend myself without going bankrupt. We think that because we’re right, morally right, common sense-ally right, we’ll win. Not necessarily. Very not necessarily. And that’s shocking, isn’t it?

Whether I’m responsible or not I don’t want to have to give up everything I own to defend myself or pay a judgment. The way I see it we’ve worked way, waaaay too hard to stay out of debt and build up our savings and a few assets to give it all away to someone else. So, that’s why I think I’m finally going to buy a Personal Liability Umbrella.

A Personal Liability Umbrella policy provides an extra layer of liability coverage (usually starting at $1 million) over and above what the limit of liability on each of your underlying personal liability policies (i.e. homeowners, personal automobile, boat-owners, motorcycle, etc).

The policy covers “personal injury” liability such as bodily injury, property damage, sickness, disease, disability, mental anguish, false imprisonment, wrongful entry, libel, slander, humiliation, defamation of character, invasion of privacy, etc. The coverage is often broader than what would be covered on your underlying policy, as a typical Homeowners policy covers only “bodily injury” and “property damage” liability. So, if for example you are sued for making an allegedly libelous statement about someone in the newspaper, that would be excluded by your underlying Homeowners policy, but covered by the Personal Liability Umbrella policy, up to the limit of the policy.

Perhaps the most valuable aspect of a Personal Liability Umbrella is the coverage for the cost of defense of lawsuits. In addition to the $1 million liability, most Personal Liability Umbrella policies also pay for defense of suits that are not payable by the underlying policies, all expenses incurred by the insurance company, all costs taxed against the insured, premiums for appeal bonds, reasonable expenses incurred by the insured at the insurance company’s request, and interest on unpaid judgments.

The cost? About the same as one hour of an attorney’s time per year. One hour.

So, who should have one?

  • Do you own your home or condo?
  • Do you have children?
  • Is there a teenage driver in the family?
  • Do babysitters or cleaning people work in your home?
  • Do you have a swimming pool?
  • Do you ever leave your home in the care of a housesitter?
  • Do you regularly ferry other people’s kids around in your car?
  • Do you have a dog, snake, ferret or other pet?
  • Are you active in sports, such as golf, biking, skiing, or mountain climbing? Do you own a boat?
  • Do you own rental property?

In most cases, the more often you answer yes, the more likely you need an Umbrella policy. But for some people, one “yes” answer is all it takes. For example, lots of people who can’t sell their homes in the current market are renting them to others. I would absolutely, positively not even consider renting out any property I own without having an Umbrella in place.

Talk to your insurance agent for some more info. Most companies will only write the policy if you have your home and/or auto insured with them. And I may have to increase my auto coverages to qualify for one (my company requires that my auto liability limits be $250,000 per person/$500,000 per accident), but that’s okay.

Now I won’t have to worry if someone leaves my house with a cup of hot coffee in their crotch, spills it and sues me. Because, you know, I was really losing a lot of sleep worrying about that.

The preceding information is not advice, it’s just my thoughts and opinions. I’m just a girl on the web, not currently licensed in insurance or anything else in any state. You should absolutely seek the counsel of an insurance agent licensed in your state before taking any action at all. Coverages and programs discussed may or may not be available in your state.

Did you like this article? Be sure to check out my other articles on insurance:

Auto Insurance 101: Part 1 ~ Before We Shop Let’s Understand What We Have

Auto Insurance 101: Part 2 ~ 10 Tips for Shopping Smart

Auto Insurance 101: Part 3 ~ What to Do With The Quotes Now That You Have Them

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12 Responses to “Why You Should Consider a Personal Liability Umbrella”

  1. Kayla Says:

    Seriously. What’s wrong with our society??!! It makes me so sick knowing that this happens in our country! Will it ever end??!! Probably not. I can only see it getting worse. Obviously, there are some cases where I can see the lawsuits being justified, but in your Dad’s case…..that’s just WRONG!!

    I do have a question :)………. does having an umbrella policy make you more vulnerable to a lawsuit? If the plaintiff knows that you have this coverage, is it more likely they will sue you for the big bucks?

    Just curious.

    Big :bitchslap: for the lawyer representing the plaintiff in your Dad’s case. A majority of the time, I like to blame the lawyers for such frivolous cases.

    Ugh. I must go vomit.

  2. mrsmacheide Says:

    Excellent advice. I just got the bill for our Unbrella policy in the mail this week. We got it when we put a pool in the backyard. It is definitely something people can’t do without anymore.

  3. Funny about Money Says:

    Excellent, excellent advice. My son, an insurance adjuster, has been urging me to get an umbrella policy…tomorrow, I’m calling my insurer to add one.

    Also…I’ve added a link to this first-rate post to Funny’s Sunday round-up. Thanks for the good insight.

  4. Mrs. Micah Says:

    Dude. I should have totally sued that ski instructor when I got a concussion during the ski lesson. In retrospect, it left me with brain damage (we didn’t know that for a while…we knew it messed up my reading/writing/speaking for a few months, but there were some small effects that continue to this day). And yet…

    I wouldn’t sue.

    I hit an icy patch. It was a ski slope. I was moving very very fast downhill on skis. Accidents happen. At least I wasn’t the guy in my group who’d hit two trees the year before. He had a concussion and two broken legs.

  5. BeThisWay Says:

    Kayla – Given the mentality to go after people with deep pockets, I think some people will be more likely to sue if you have the Umbrella. That said, in order for them to determine that you have deep pockets they have to be considering suing in the first place, which means that you were vulnerable anyway. With the Umbrella there’s less chance of them getting any of your assets…

    Mrs. M – Indeed, having a pool is another instant-Umbrella-need-indicator.

    Funny – Thanks for the kudos! I’ll be sure to check out the round-up!

    Mrs. Micah – If everyone felt the way you do there’d be no need for personal injury lawyers. That, unfortunately, would mean we’d see more political commercials. Despite that high price, it would be nice to see more personal responsibility and less blame-tossing.

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