McQuiston: Love Bites – Get Umbrella Coverage

The Jemez Agency

Love Bites—Get Umbrella Coverage

In today’s economy, everyone is pinching pennies. Shouldn’t a home and auto policy leave you adequately covered for the bad stuff that happens?

Unfortunately, we live in a world of lawsuits. Large damages can be awarded, be extremely expensive and have long-term financial impact. Some of those lawsuits can come from unlikely sources, such as our furry friends.

New Mexicans seem to own lots of dogs. Some are shy and timid. Others seem (at least to me) to be mean and aggressive. Whether you own a timid mutt or the aggressive (protective?) pit bull you have the same potential exposure, dog bite. It doesn’t matter if the curious 4 year old next door pulls on the tail of Pookie the mutt or Thor the pit bull mistakes the approach of a stranger, both of these owners will probably get sued for the damages their dogs caused. According to the Center for Disease Control and Prevention, 4.7 million people are bitten by dogs each year, with half of those occurring on the owner’s property. Dog bites, according to the Insurance Information Institute, account for about a third of all homeowner’s insurance claims. How much can an injured party receive? The answer is, it depends. On a lot of factors.

I had a client many years ago who’s dog injured a little boy. He was pretty badly injured and his injury would  leave a scar  for the rest of his life. The parents sued for a lot. My clients homeowners policy provided $100,000 of liability insurance, but that was eroded away in emergency room, hospital and doctor charges. Before going to court, my clients insurance company and the boy’s parents settled out of court for almost $1 million. Luckily, my client had an excess liability or umbrella policy. Without an umbrella policy, my client would have personally been responsible for that amount. And just because you don’t have that amount sitting in the bank, don’t think our legal system will let you off the hook. They will place liens on the things you own and on future earnings.

The umbrella policy isn’t just for dog bites. It gives you additional protection above what your home and auto liability provides. And if you own a motorcycle or boat, you get excess liability coverage for those as well.

An umbrella policy can be purchased in amounts from $1 million to $5 million with most insurance carriers. And the cost is pretty cheap for what you are getting. I had a client recently who changed the deductible on his homeowners policy and used that savings to buy an umbrella policy.

In my opinion, many people try to lower their insurance  cost by cutting coverages instead of adequately protecting their current and future assets. Talk to your insurance professional to see where you can best allocate your insurance spending to achieve maximum protection.

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