Category: Insurance

Why You Need an Umbrella Policy?

Do you have enough liability insurance?  If there were a vehicle accident for which you were at fault, and a child were permanently disabled, would your auto liability policy offer enough coverage to pay for the skilled care the child would need for years to come?  If a young parent were killed in a freak fall on your property, would your insurance cover the support he would have provided his children as they grow up?  We’d all like to believe that such catastrophic losses would happen only to other people.  But there is nothing we can do to totally eliminate the risk of this type of event in our own lives.

Consider what would happen if there were a settlement (or judgment, if it goes to court) of $800,000 as a result of an auto accident for which you were liable.  Let’s say you have insurance with a limit of $300,000 per accident.  What would happen?  The auto insurer would pay its $300,000.  Then virtually everything you own would be fair game for seizure to pay off the additional $500,000, except for assets that may be protected in some states, such as your home.  Furthermore, your earnings could be garnished for years to come.   With stakes this high, and considering the relatively modest cost of additional liability coverage, it just makes sense for many people to purchase the added protection of an umbrella policy.

An umbrella policy is insurance that provides additional coverage once the liability limits on your homeowner’s or auto insurance policy are exhausted.  Umbrella policies are typically sold with limits of $1 million to $10 million.  In the example above, if you had a $1 million umbrella policy, once you satisfied the deductible, the auto insurer would pay the auto policy limit of $300,000, and your umbrella insurance would pay the other $500,000 of the $800,000 settlement or verdict.  Your assets would not be at risk.

One myth about an umbrella policy is that it’s only needed by the wealthy.  These days the cumulative value of homes, vacation homes, rental property, cars, boats, savings, investments, and so on, owned by many people, who don’t consider themselves wealthy, make them vulnerable to liability beyond their auto or homeowner’s insurance limits.  A good question to ask yourself is whether you have assets that you don’t want to put at risk in the event of a catastrophic liability.

Lifestyle also plays a role in determining liability risk.  Do you have a swimming pool, trampoline, swing set, or other recreational equipment that can lead to accidents?  Are there frequent guests on your property?  Do you engage in sports that could injure others?  Do you live in a wealthy town where you might be more of a target for a liability lawsuit?

How Much Do You Need?

People often reason that the amount of umbrella coverage they need should be the value of their assets, but this might not be adequate.  If, for example, you have assets of $1 million and buy $1 million of coverage, what happens if you’re found liable for a $2 million judgment?  Insurance would pay the first $1 million, plus the limit of the underlying homeowner’s or auto policy, but you could lose a significant amount of your assets for the second million.  If you were found liable for $3 million, you could lose not only a significant portion of your assets, but you’d still owe $1 million.  Both your future income and any inheritance you might receive would be jeopardized.   Just how much coverage you need depends on all your risk factors, your own financial planning, and your tolerance for risk.

There is usually a substantial premium discount if you buy your auto, homeowner’s, and umbrella policy all from the same company.  Additionally, if you have a claim, you eliminate the potential problems of dealing with different insurance companies where each might be trying to shift payment responsibility to the other, leaving you caught in the middle.

The cost of an umbrella policy depends on such criteria as the amount of coverage, the insurance company issuing the policy, and your own ‘personal risk factors’ (such as the number of traffic tickets you’ve gotten in the past few years, and possibly your credit report).  A million dollar policy often costs less than a dollar a day.

For some people another attractive feature of an umbrella policy is that it provides coverages not found in their homeowner’s or auto policies.   You are covered if you cause bodily injury, property damage, or personal injury.  Generally, the types of personal injury covered include false arrest, false imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction.  Some umbrella policies also provide coverage if you face liability arising from your service on the board of a civic, charitable, or religious organization.

Your insurance agent can help you decide whether an umbrella policy makes sense for your life style and financial needs.

Let an Umbrella Policy Be Your Safety Net

There comes a certain point in your life when you can look back with a sense of pride at what you have been able to accomplish. Your hard work has paid off and you now are the proud owner of a nice house, a great vacation home, a luxury car and all the other amenities associated with the good life.

If you have reached this stage of your life, you are now wealthy enough to be vulnerable to lawsuits.  Incidents can occur in your day-to-day activities that could potentially cost you.  For example, the elm tree in front of your home could fall onto a neighbor’s house, and in the process, pull down electrical wires that start a fire, burning the neighbors house to the ground. Depending on the neighborhood, replacement costs for the house could be several million.

Or perhaps you have just been named to the board of your favorite non-profit. The organization is being sued for personal injuries that occurred during their annual bazaar. As a board member you are also liable and can be sued.

If you’re like most people, you feel confident that your homeowner’s and car insurance will protect you if you fall victim to a claim arising from normal activities. What you should be aware of is that while these policies do include liability coverage, the amount of coverage usually tops out at $300,000.

To protect assets, people need to increase their coverage with an umbrella policy. Umbrella policies take over after the liability insurance in your homeowner’s and auto policy stops. The umbrella policy will pay claims above the liability limits you currently have, up to the limit you have selected.

Since the major portion of the risk is assumed under the primary auto or homeowner’s policy, personal liability umbrella insurance is inexpensive. You can buy a $1 million or larger umbrella policy for about $200 a year.

Many carriers prefer to sell umbrella policies to clients who have both their auto and homeowner’s insurance coverage with them. Your insurance company may also require that your primary liability limits be a certain amount. Umbrella policies are generally sold with a deductible ranging from $250 to $1,000. Your carrier covers you if your actions cause bodily injury, property damage, or personal injury to someone else.

The broadest coverage under an umbrella policy is probably the personal injury coverage because it includes coverage against false arrest, false imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction. Your homeowner’s and car insurance policies cover bodily injury and property damage, but not personal injury. You can also buy umbrella policies that include coverage if you are held liable in the course of serving on the board of a nonprofit organization.

Another important aspect of this type of coverage is it not only pays damages, but also lawyer’s fees and defense costs should you be the defendant in a lawsuit. Even if a lawsuit is obviously a nuisance suit, you still have to pay the costs for mounting a defense. In this age of rising litigation expense, it is reassuring to know that you are well equipped to handle it before the need arises.

Reduce Premiums? Reduce Risk with Loss Control Strategies

Business owners know an injury to an employee or severe property damage destroys productivity; so all losses should be avoided or reduced.

So why do insurance loss control representatives’ visits and the ensuing safety recommendations bother business owners so frequently? Is it the nuisance that any disruptive visitor might be? Is it the money to implement loss control strategies?

Insurance companies understand that the frequency of claims, that is the number of claims, predicts risk levels much more accurately than does the severity of claims.

Insurance company recommendations tend to reduce the frequency of claims. In the long run, reduced frequency leads to better experience and greater discounts. Selfishly, you should implement loss control recommendations that lead to lower costs.

For small business, as defined by one that cannot afford an in-house full time safety officer, the insurance company loss control representative acts in that capacity to review the overall loss control picture. Use this service to your advantage.

The insurance company wants to reduce risk as much as you do. Of course, the company is less concerned about the budget to do so when you’re fulfilling their recommendations.

So, what can you do about costly compliance measures? Ask the loss control representative for help. These professionals are in the field all the time and see many solutions to the same problems. They will have some cost effective ideas.

What other proactive measures can a business owner implement? First, a loss control survey, sometimes called a risk management survey, outlines every process, job, piece of equipment, or operation with regards to safety.

Once your safety concerns are identified, you can manage the risks in two ways: loss control measures or strategies. A loss control measure reduces the frequency of claims. A strategy eliminates or reduces risk.

Loss measures include installing equipment safety devices, controlling environmental conditions, and supplying proper protective gear. Right now would be a good time to solicit feedback from the insurance loss control representative. They have valuable experience in this area.

Manufacturers and contractors are familiar with equipment safety devices, such as guards on saw blades or operator cages. Ergonomics has become a popular form of loss control that ties into safety devices. Differing control knobs, placement of controls and sight lines improve operator efficiency and eliminate unsafe habits.

Environmental controls, for example ventilation and lighting, reduce worker fatigue, unhealthy air quality, and poor visibility. Injuries decrease in frequency as a result.

Proper protective gear may seem a bit old school, but safety is the test of time. Goggles, gloves, hard hats, protective clothing, and even proper work clothing can help to reduce claims.

Installing guards and providing equipment protection is half the battle. Safety must be taught to the employees at all levels for an effective loss reduction program. New and old measures should be embraced by management and implemented correctly.

Insurance loss control departments are a good source for safety lesson plans, posters, or even direct employee meetings to teach and discuss safety issues.

Loss control strategies eliminate or reduce risks. Prevention, avoidance, transfer, and separation are examples of viable strategies.

Prevention strategies anticipate future problems. A business may carefully screen driver applicants with background checks, records, and road testing to preclude poor operators from damaging valuable vehicles or injuring third parties.

Avoidance eliminates existing or potential risks. The business screens drivers unsuccessfully; and therefore decides to eliminate its fleet and use common carriers. The business has avoided all risks associated with operating vehicles, but not those associated with shipping products.

Separation segregates risk. The business decides to build a second manufacturing site rather than place both lines in the same building. The risk of both lines being destroyed at the same time is greatly prevented because the exposures are separated.

This strategy may allow one site to shut down for difficult maintenance while the second site continues filling orders. Better maintenance is a safety measure granted by the separation strategy.

Transfer strategies include: contractual transfers, subcontracting work, and buying insurance. Transferring is usually a legal risk reducing strategy.

Purchasing insurance is a strategy to fund claims. The business may not technically be reducing losses, but it is keeping those losses – premiums – at a tolerable level. This strategy brings us back to listening to the insurance company recommendations.

If you proactively manage the input rather than withhold feedback to the safety representative, in the long run, you will focus on the important issues, eliminate the intolerable risks, and attain affordable insurance premiums.

Umbrella Insurance Protects You from More than Just Weather

Although you have probably heard of umbrella insurance, there’s a good chance you have no idea what it is. An umbrella policy is designed to protect you from almost everything that your homeowner’s and auto insurance policies do not, as well as fill in gaps in coverage when the limits of these policies are exhausted.

Lawsuits are filed daily against ordinary citizens, with reasons ranging from the frivolous to the justified. More often than not, people have no extra protection to block the plaintiff from going after their personal assets in the lawsuit. Umbrella insurance will protect you from this type of situation.

An umbrella is often referred to as excess liability. This excess liability coverage kicks in when the underlying limits on your homeowner’s or auto policy have been exhausted, or if you are sued personally for something that neither your homeowner’s nor your auto insurance covers. Depending on the insurance company, you can purchase anywhere from 1 to 5 million dollars worth of excess coverage, and sometimes as high as 10 million.

The amount of coverage you select depends on how much you are worth. If you have 5 million dollars worth of personal assets, you should get a 5 million dollar umbrella.  It is not uncommon for someone to buy a 5 or 10 million dollar umbrella policy even if that number far exceeds their net worth, because the coverage is so inexpensive to purchase.

Most insurance companies will not offer you umbrella coverage unless you already have both your homeowner’s and auto policies with them. Also, the insurer will require that you maintain a certain level of liability on the homeowner’s and auto policies in order to qualify for the excess policy. Usually, you must maintain at least $250,000 of bodily injury liability per person, $500,000 per accident, and $100,000 for property damage for your autos, and $500,000 of liability for your home.

The good news is that coverage is cheap. It is possible to obtain 1 million dollars worth of excess liability for just over $100 per year. The more cars and homes you have, the higher the premium, but the cost is still low. In addition to your home and cars, liability associated with any other conveyances you may have, such as boats, motorcycles, and other recreational vehicles, may also qualify for coverage under the umbrella, depending on the insurance company.

You are probably wondering when the umbrella coverage would ever be used. As an example, if you are involved in a car accident where you crashed into a pedestrian who was walking on the sidewalk, resulting in medical expenses that cost more than what your auto policy covered, the umbrella policy would kick in. Or, if the pedestrian decided to sue you for negligence and punitive damages, your umbrella can be utilized to cover your legal expenses and to pay any judgments levied against you.

You should also know that the excess liability covers you for all sorts of things that have nothing to do with your cars or homes.  For example, coverage includes personal injury protection, which includes false arrest and imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction.

Also, some umbrella policies provide coverage for you if you are sued in connection with any charitable boards or organizations of which you are a member. You may have to contact your insurance company and pay an extra premium for this type of coverage.

Hopefully this has helped illuminate the importance of having umbrella insurance. Without it, your personal assets are vulnerable in any lawsuit or legal action. The risk of a multi-million dollar lawsuit greatly outweighs the cost of protecting yourself with an umbrella policy. Give us a call to us about what type of policy might be right for you.

Why Every Contractor Should Have E&O Insurance

Most contractors carry general liability insurance policies. However, very few understand the need for additional comprehensive errors and omissions coverage. To protect themselves from the costly results of unintentional work errors, contractors must have E&O insurance. There are several important issues to consider about this type of coverage.

Contractors are prone to errors and omissions claims. The business risks they face on a daily basis may include unintentional damage to the insured party, impairment of property, damage to products or a wide variety of other damages. Since most courts are quick to rule against contractors in these types of claims, they are much more vulnerable to trouble. Although many individuals view this coverage as unnecessary, it is important to remember that a simple liability policy does not offer coverage for damages due to errors and omissions. This means that contractors are financially responsible for the costs resulting from client claims. Keep in mind that only E&O coverage offers protection to contractors who face these issues.

Always choose insurance companies that have experience with contractors. It is important to work only with companies that have a solid history of E&O practices specifically with contractors. Policies designed for contractors have special clauses and inclusions that are not found in other E&O policies. The best practice is to avoid relying on coverage titles, and carefully review the document’s provisions. While every contractor benefits from this special coverage, it is especially important for those who work on design build projects or in construction management. A contractor’s E&O document is written as a claims-made form, which means that it covers omissions and errors occurring during the policy’s period. Incidents occurring prior to the enactment of the policy are not covered.

Carefully read the fine print of the policy. E&O insurance for contractors often has stipulations limiting the coverage capacity named in the policy. This emphasizes the importance of purchasing a policy that is designed to specifically describe the various types of coverage provided. Keep in mind that coverage does not include damages caused by subcontractors. For this reason, general contractors should always hire subcontractors with steady records of quality work. Paying the price for substandard work performed by others is always costly. In addition to being fully aware of what policies provide, contractors must specify their desired coverage. It is important to remember that not all E&O policies offer coverage for legal expenses.

Although all contractors makes mistakes, only those who properly protect themselves are able to recover. Susceptibility to legal action and the high risk of claims are two issues every contractor should keep in mind. Litigation can be costly, so having a solid E&O policy provides security.

Ensure Your Next Party Doesn’t Turn into a Liability

There’s nothing like the combination of good food and good friends. Whether it’s a potluck dinner for a few of the neighbors, or a wedding for 500 guests, these are events that make memories. However, those memories could easily turn into bad ones if one of your guests leaves your home intoxicated and gets behind the wheel.

Most people are aware that businesses like restaurants and bars have legal obligations to stop serving alcohol to visibly intoxicated patrons. But you may not be aware that in some states, individual hosts also have legal responsibilities when it comes to serving alcohol. Legislation called “social host” laws makes you responsible for the actions of your inebriated guests after they leave your party venue. Currently, 33 states and the District of Columbia have social host laws according to Mothers Against Drunk Driving (MADD).

There are specific circumstances that must be present for a social host to be liable for the injury or damage caused by an intoxicated guest:

  • They were aware, or should have been aware, that the guest who caused the injury/damage was intoxicated.
  • They knew that the guest who caused the injury/damage would be driving after they left the gathering.

There are some ways to protect yourself from liability if you do serve alcohol at your next party:

  • Stop serving alcohol after a couple of hours and serve coffee instead.
  • Make sure there is plenty of food available for your guests to eat while they are drinking.
  • Have designated drivers to take intoxicated guests home.
  • Keep a list of cab companies’ phone numbers by the telephone so that it is accessible if you need to call a cab for a guest who shouldn’t drive.
  • Remain sober so that you can monitor your guests’ sobriety level.

Another good way to protect yourself from liability is to check your homeowner’s policy before your next party to determine what your coverage is for property damage and liability. In the event of an incident, your homeowner’s policy would pay for covered liabilities up to the policy limit. You should also consider purchasing a personal liability umbrella policy for increased protection.

Apartment dwellers and owners of condos and co-ops typically aren’t covered for liability and personal property damage under their building’s insurance policy. Generally, the building policy only covers the common areas. That’s why renters should have renter’s insurance, and condo and co-op owners should purchase a HO-6 homeowner’s policy that is specifically designed for their needs. They should also review their condominium or co-op association’s master policy to determine what their responsibilities are in the event of an incident.

If you hire professional caterers and bartenders for your event, don’t assume that you are covered under their liability insurance. You must be specifically named on the policy to be covered in the event of an accident. However, if you are named on your party professionals’ liability policy, their insurance company will defend you if you are sued. That’s why it’s important to verify that they have liability insurance, the specific situations that are covered, any exclusions, and if you can be a named insured on the policy.

Why Your Company Needs Business Interruption Insurance

For most companies, business interruption insurance may be as important for survival as fire coverage. It is difficult to find a business that did not obtain insurance for windstorm and fire damage. However, too many business owners do not consider how they would continue functioning if a windstorm or fire actually did damage their property. This is especially true with small business owners. Business interruption insurance is not sold independently. It is an additional type of coverage for a property insurance policy. In some cases, it may be included in a package policy for business owners.

Businesses that must completely cease operations while the premises are repaired often lose money to their competitors. Quickly resuming business after a disaster is essential for survival. If a company must vacate the premises because of damages from a disaster, business interruption coverage extends protection for lost income. It also provides coverage for the profits that would have been earned if the business had not sustained damage. The profit reimbursement is based on an average of financial records, so it is imperative to keep them up-to-date and accurate. These beneficial policies also cover operating expenses that may not be halted due to the damage. For example, electricity would still be needed for most businesses, so the insurer would provide money for electricity bills.

It is important to make sure the policy limits are generous enough to cover the business for more than a week. Keep in mind that it may take much longer than most people anticipate to resume operations. If a major disaster happens, it may take several weeks to resume operations. The waiting period for business interruption coverage to start is usually about 48 hours. Policy pricing is based on the risks a particular business faces. Businesses in some locations are more likely to sustain certain types of damage than others. In addition to this, the nature of the business plays a major part in determining policy pricing. For example, a restaurant would be more expensive to insure than a travel agency. This is due to the restaurant’s heated appliances and grease creating a higher risk for fires. While a restaurant would have a hard time operating out of an alternate location, the travel agency would easily be able to do this. These are just examples of some of the issues determining premium amounts. To get a clearer price estimate for a specific business, discuss individual business details with an agent.

Another type of protection to consider with business interruption coverage is extra expense insurance. This type of addition reimburses companies for slightly more than the amount of regular operating expenses. By receiving extra money, the business is less likely to have to shut down for restoration. If any extra expenses decrease business interruption costs, they will usually be covered. Extra expense coverage alone may be enough to compensate some businesses. To learn the risks and options, discuss them with an agent.

Five Reasons You Might Want to Get Under an Umbrella

Umbrella insurance policies can be an important feature of personal financial plans. They provide additional insurance that takes over when a claim uses up all of the homeowner’s or auto insurance. They even cover some losses that home and auto insurance do not cover, though the policyholder must pay a small deductible for them. They provide insurance amounts as low as $1,000,000 and may provide $5,000,000 or more. Despite the large amounts, they are not just for wealthy people. Here are five (actually six) situations where umbrella policies are vital:

 

  • Auto insurance: A man is late for work and speeding on the highway. He loses control on icy pavement and strikes another car in the driver’s side. The other driver suffers serious injuries; hospitalization, follow-up care, medicine, rehabilitation and pain and suffering tally up to $900,000. The at-fault driver has an auto insurance policy that covers $250,000 for injuries to any one person. If he has an umbrella with a $1,000,000 limit, it will pay the remaining $650,000.
  • Bonus auto insurance scenario, based on a true story: The policyholder’s son loses control on a highway overpass. His car plunges off the overpass and lands on a row of vehicles for sale in a Lexus dealer’s lot. Six vehicles are damaged to the tune of $150,000. His father’s auto insurance covers $100,000 in property damage from any one accident. If he has an umbrella, it will pay the remaining $50,000.
  • Homeowners insurance: A homeowner has insurance that covers her liability for bodily injuries to others, up to $300,000 per accident. A neighbor who has three children under age 10 drowns in her swimming pool. His estate sues her for $1,500,000. Her homeowner’s insurance will pay all of its $300,000; if she doesn’t have an umbrella, she is responsible for the remaining $1,200,000.
  • Boats: A man has a boat insurance policy that covers his liability for injuries to others up to $300,000 and an umbrella policy with a $2,000,000 limit. He loans his boat to a friend for the weekend. The friend takes it out on a lake with three buddies and a case of beer. He becomes intoxicated and plows into another boat late at night. The survivors and the estates of the deceased sue the driver and the boat owner. The court finds the owner 20 percent liable for the $5,000,000 judgment. His boat policy pays $300,000 and his umbrella pays $700,000.
  • All-terrain vehicles: A man’s grandson from out of state visits him for the holidays. He takes the boy out for a spin on the ATV he bought the week before, but the boy bounces off and suffers critical injuries. The man bought coverage for the ATV under his auto policy, but the most it will pay is $100,000. The boy’s medical care will cost $750,000; his grandfather’s umbrella policy will pay $650,000.
  • Personal injury: A woman loudly repeats a rumor she heard about one of her neighbors. The neighbor sues her for defamation of character and wins $500,000. The woman’s homeowner’s insurance does not cover defamation, but her $1,000,000 umbrella does. After she pays a $250 deductible her umbrella pays the rest.

Severe accidents like these can and do happen to people every day. When something like this happens, an umbrella policy may be all there is to keep the person responsible from financial ruin. An insurance agent can explain coverage details and provide estimates of the cost. The relatively low cost may be well worth the peace of mind should a catastrophic accident occur.

Why Every Contractor Should Require Workers’ Comp Insurance

Good risk management plans allow workers’ compensation coverage for any hired subcontractors. Since subcontractors are not able to hide behind statutes for contracts, workers’ compensation coverage may be required whether there are statutory provisions or not.

For those who are in contractor and subcontractor relationships, over 40 states have statutory regulations regarding workers’ compensation benefits. Employees of subcontractors must also be offered workers’ compensation benefits if they are injured. The benefits are paid by the immediate employer or the company hiring the immediate employer for the job. As a rule, general contractors face the responsibility of offering workers’ compensation to employees of uninsured subcontractors. This is true regardless of the number of employees the subcontractor has. Premiums are also assigned to the general contractor.

General Contractors & Independent Contractors
It is important to avoid confusing the subcontractor-general contractor relationship with an owner-independent contractor relationship. A general contractor is the entity the owner contracts with to complete various projects. A portion or all of the tasks are then assigned to subcontractors. In order for a general contractor’s relationship to function, there must be three separate parties. These parties include the owner, an independent contractor and a subcontractor. If any portion of a job is subcontracted, a general contractor’s status changes to independent contractor.

An independent contractor is a party contracting directly with an owner or principal to complete a job. In most cases, independent contractors perform jobs that the principal or owner does not normally do. The entire job is completed by the independent contractor and employees. Keep in mind that they are not considered employees of the principal or owner.

As a rule, principals are not usually financially responsible for an independent contractor’s injured employees. They are also not responsible for the injuries of employees of subcontractors hired by the independent contractor. General contractors are financially responsible for an uninsured subcontractor’s injured employees.

Principals & General Contractors
If the subcontractor and general contractor both lack workers’ compensation coverage, the principal may be sued for out-of-pocket expenses incurred by an injured worker. Since the principal does not qualify as a general contractor or employer, financial responsibility is not usually an issue. While employer status is nonexistent, there are other theories of liability that may constitute the need to pay compensation. For example, failing to provide a safe workplace could result in the principal paying an injured non-employee individual. In such a case, a workers’ compensation policy or a general liability policy usually provides adequate defense.

It is important for general contractors and principals to require any contracting entities to provide workers’ compensation coverage. When an independent contractor or subcontractor purchases this coverage, the act shows that the party does not have any misconceptions about an employer-employee relationship. Contracts between principals and general contractors should be specific in placing responsibilities. In the contract, a general contractor should agree that failing to require this insurance could result in personal statutory responsibility for the subcontractor’s injured employees. The general contractor should also agree to hold the principal harmless in an injury case.

Establishing Relationships With Subcontractors
While relationships between contractors and subcontractors are most commonly found in the construction business, they are also found in other industries. For example, cities hire special consultants to analyze traffic patterns. The consultant then hires engineers to perform various studies. They may also perform maintenance on traffic lights, or the work may be contracted out. There are plenty of other examples. However, all contractors and subcontractors
are subject to the laws regarding workers’ compensation. To avoid facing financial responsibility for injured workers, it is important for general contractors to require all lower tiers of workers to carry their own workers’ compensation insurance.

Protect Your Assets with an Umbrella Policy

Hopefully, you will never be served with legal papers and involved in a costly lawsuit. But in the event you are, it will be imperative that you have the insurance to cover your legal liability. That’s where a personal liability umbrella policy can help.

Umbrella policies supplement the liability coverage you have through home and auto insurance and provide an extra layer of security by protecting your assets that might be at risk in a liability lawsuit.

If you don’t have enough liability coverage from your homeowner’s and auto policies to adequately resolve a claim, the person suing you can go after your home and your other assets to pay for damages. Umbrella policies cover damage claims that you, your dependents, or even your pets may cause.

Umbrella policies kick in after, and pay in addition to, your auto and homeowner’s insurance liability limits. The bulk of the risk is assumed under the primary auto or home policy, which enables insurers to offer umbrella policies at very reasonable costs.

However, most insurance companies will not sell an umbrella policy unless both your auto and homeowner’s insurance is with them. In addition, your insurer may stipulate that your auto or homeowner’s liability limits be at least a certain amount, such as $200,000 to $300,000. Umbrella policies are generally sold with a deductible that might run anywhere from $250 to $1,000, pocket change if you’re being sued for millions!

Umbrella policies provide much broader coverage in case you are sued, covering you if you cause bodily injury, property damage, or personal injury. Certain umbrella policies also cover you if you face liability arising from your service on the board of a civic, charitable, or religious organization.

Umbrella policies typically do not cover claims from business endeavors. If you own a business, even a small one, you’ll need to purchase business insurance to protect yourself from business-related liability claims.

To determine if you need an umbrella policy, analyze your risk of being sued and the assets you have at risk. Do you have a swimming pool or trampoline that may pose a threat to visitors? Of course, you may decide your personal situation makes lawsuits very unlikely.

Before making any decision, compare the umbrella premium with the cost of raising the liability limits on your auto and homeowner’s policies. It may work to your advantage to raise these current limits by several hundred thousand dollars, and you may come out spending less than you would on umbrella policy premiums.