When contacting their Lareau broker for an automobile or home insurance quote, people are mainly thinking about protecting their property against fire, theft, and water damage. We all know people who have woken up to water up to their knees or who came back from vacation to find their house had been broken into. Nearly every day, the media shows shocking images of burning houses—but what about civil liability insurance?
By definition, civil liability insurance covers pecuniary damages that you may be held liable for as a result of damage to property and bodily injuries caused to a third party. The insurer compensates the third party up to your contract’s maximum coverage amount and legal representation fees are covered on top of the coverage limit. For the claim to be admissible, the third party must of course prove that there is a causal relationship between your negligence and the injury or damage sustained, whether it be material, physical, or moral.
Umbrella insurance is aptly named—like an umbrella, it helps you weather the storm. It extends the scope of your civil liability insurance by adding to your basic coverage. In addition to offering added coverage ranging from $1M to $5M, umbrella insurance applies worldwide.
Picture this. You take a trip down to Vermont to spend a weekend with your family. You’re enjoying a leisurely drive when suddenly a deer crosses the road. You slam on the brakes and attempt to swerve around it. The outcome? You lose control of your vehicle and it ends up in the opposite lane, crashing into a car with two passengers. One of them dies, while the other one sustains life-altering physical injuries. The investigation determines that you are liable for the accident. What will you have to pay? Paramedics, police, firefighters, medical fees, funeral expenses, lost wages, loss of amenity for the person who ends up with a disability, loss of enjoyment for the family of the deceased (loss of enjoyment claims have no limits—the family may decide to sue you for several million dollars), legal fees, potential damage to road infrastructure, etc. Fortunately, you have umbrella insurance coverage, so you’ll avoid a major headache.
Umbrella insurance covers you in situations that “only happen to others,” but when you find yourself in such a situation, you’ll see the full value of this coverage. This is why people always bring an umbrella; you never know when a storm will hit….
Umbrella insurance is crucial. Next week, I’ll give you six good reasons to get it.