By: Aimee Garcia, Insurance Marketers, Inc.
Some individuals, particularly wealthier ones, have a higher than normal loss exposure to lawsuits. This tendency is often referred to as a “suability factor”.
- How suable you are can be determined by examining the following
- wealth, family and lifestyle characteristics:
- Size of your savings account and stock portfolio
- Size of your real estate holdings
- Engage in high-risk activities (jet-skiing, boating, horseback riding, etc)
- Have a student driver in the family
- Have a swimming pool
- Have pets
- Family income
- Profile in the community and media
- Leadership activities on not-for-profit boards
- Leadership activities in home owners’ associations
- Future income
As you accumulate assets, you become a larger target for lawsuits. If you lose a lawsuit and don’t have enough liability insurance, your assets (including savings and investments) could be taken to satisfy the judgment. Even your future earnings could be garnished to satisfy a judgment against you.
How to reduce your risk? A Personal Umbrella Policy is a low-cost insurance policy that provides excess liability coverage above and beyond the limits of the liability coverage on your personal auto and homeowners policies.
This additional coverage pays after you have exhausted your primary coverage if you are sued for damages suffered by someone as a result of an accident – especially an unexpected catastrophic accident – involving your car, property, or recreational activities.
People with a low suability factor should still strongly consider purchasing a personal umbrella policy with at least $1 million in liability limits. People with a high suability factor nearly always need a personal umbrella policy with at least a $2 million limit.
Remember that this is a relatively inexpensive policy that provides excess liability coverage over your homeowners and personal auto insurance policies. In some cases, it provides broader liability coverage than that found in the underlying policies.
You can add Personal Umbrella coverage to take over where your auto and homeowners coverage ends. Annual premiums start as low as $200 a year for additional coverage of $1 million.