Colorado Insurance: Who Needs Umbrella Insurance

by Cindy Chase

In today’s litigious world, I think umbrella insurance policies are a must.  Why? In exchange for a small annual premium, you get a significant amount of protection against the unexpected. Here is how the policy works.

  • Umbrella insurance is a special kind of liability policy.
  • Liability is the amount of money you are responsible for paying when an accident is determined to be your fault.
  • Umbrella policies  provide an extra layer of protection over and above coverage in your primary policies such as automobile and homeowner’s insurance, which have limited liability benefits.

Your umbrella policy kicks in and protects your property and assets from claims against you, when your other policies are depleted. Claims can include things like medical payments and lost wages due to negligence. Or, it can cover legal bills if you end up in court.

What Would Happen to Your Financial Assets
in This Situation?

Consider the situation of a car accident. Let’s say the judge decides you’re responsible for $750,000 in damages. In addition, attorney fees come to $250,000. That’s a total of $1 million. If your automobile policy only covers $500,000 in liability, you would have a balance of $500,000 to pay.

How would you get the remaining $500,000?  More than likely, you would have to sell personal assets like your home, jewelry or other personal property. Or cash out retirement and stock accounts.

But if you have an umbrella policy worth $1 million, the remaining $500,000 would be covered and paid. The result would be a zero balance, and you would have no other financial responsibility!

Today with the average cost of damages increasing and the affordable cost of umbrella policies, I recommend umbrella coverage to all my clients.  Our goal at Aspen Insurance is to protect you before you need it. An umbrella policy provides increased peace of mind in the event of the unexpected.

Umbrella Insurance Coverage and Cost:
How Much is enough?

Everyone’s situation is different.  Evaluate the following three factors to begin to answer how much is enough?

  1. Look at the amount of liability coverage you currently carry in your homeowners and auto policies.
  2. Next determine your financial assets. What is the value of things like your home, cars, jewelry, stock or retirement accounts, etc.
  3. Now look at your risks…the factors that could influence the likelihood of getting hit with an injury claim or lawsuit by someone else. For example, do you have teenage drivers, how many drivers are in your household, do you have a pool, do you own pets?

Umbrella coverage starts at $1million with an average annual premium of $200.  This fee is dependent upon the number of drivers and vehicles in your household, so the exact cost will vary.  But the point is, it’s very inexpensive coverage that provides additional liability protection for everyone in your household…should you need it.

Remember to Include the Fun Stuff

And remember many Colorado residents enjoy the great outdoors with “toys”. If you own a snowmobile, motorcycle, boat etc. you must add them to your umbrella policy. If an accident occurs while using them, you may be faced with liability damages that exceed your policy limits.  In order to get the extended protection of your umbrella policy, they must be listed on your policy.

If you’d like to discuss your situation and the right amount of umbrella coverage please call 303-777-2991 or send me an e-mail.