Umbrella Insurance for Stormy Times

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An umbrella policy is liability insurance that protects the owner above and beyond coverage offered by primary liability policies such as homeowners and automobile. An attorney with $300,000 in auto coverage and/or $500,000 in homeowner’s coverage may feel secure until found legally responsible for severe injuries or other damages. Without umbrella coverage, a judgment in excess of the limits offered by these primary policies could sweep away a lifetime of savings.

People who think that bad things won’t happen to them are usually right. However, when the unlikely occurs, the consequences can be devastating. Consider the following:

A babysitter left a five month old infant unattended in a walker. The infant toppled over in the walker, struck her head on the floor, and suffered brain damage. The parents of the infant sued the teenage babysitter and her parents. The court awarded the infant’s parents $11 million.

In light of the relatively low premiums, the purchase of an umbrella policy is usually worth the investment. According to the Insurance Information Institute, the annual premium for $1 million worth of coverage runs from $150 to $300.

By the way, the ABA Solo, Small Firm and General Practice Division notified me last week that my upcoming book The Lawyer’s Guide to Financial Planning will be published in the next 6 - 8 weeks. I’ll keep you posted!

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