How An Umbrella Insurance Policy Can Protect You Against Catastrophic Loss

Pearson Wallace Insurance President Beth Pearson and Vice President Alexander Bennett were recently featured in this BusinessWest article about Umbrella Insurance. We know that unexpected events can happen at any given moment and can lead to catastrophic losses. Umbrella Insurance provides an extra layer of protection beyond your standard policies. To learn more about the peace of mind it offers and how you can be prepared for unpredictable storms., read the reprint of the BusinessWest article below:

Beth Pearson loves dogs as much as anyone else. Working in the insurance world, she also knows people can be careless.

“If you have a dog, and that dog bites a dog walker or bites a child, if you’re sued, that’s a catastrophic impact that can affect your life for a very, very long time,” she said. “Or let’s say a teenage driver gets behind the wheel while impaired, and an accident ensues.”

In situations like this, she added, “I always say one thing: ‘I hope you have an umbrella policy.’ It’s that important.”

An umbrella policy, as its name suggests, essentially sits atop existing auto, home, or commercial insurance policies to deliver an additional layer of protection, especially against catastrophic liability loss, noted Pearson, president of Pearson Wallace Insurance in Amherst and Pittsfield.

Alex Bennett, vice president of Business Development at Pearson Wallace, suggested another example: an inground swimming pool.

“The neighbor’s child comes over, hops the fence, jumps in the pool, and even though he’s not permitted to get on your property, the owner can still be essentially responsible for the death — or responsible for someone who’s badly injured from a diving board, a slide, or any sort of pool-related incident on your premises.”

In short, personal liability coverage of $500,000 or $1 million is simply not enough when real tragedy — accompanied by soaring liability — strikes, said Nathan Lee, a Commercial Lines producer at Rush Insurance Group in Chicopee.

“We live in a litigious environment these days,” he noted. “One million does not go nearly as far as it did five or 10 years ago. It’s not a lot of money these days.”

Bennett said agents on his team look at the property and unique situations of each client and make recommendations based on their general net worth and the specific exposures they might have.

“You have to consider the potential impact of what could happen in a life-changing event, in a lawsuit, when you find yourself in a hole for something that insurance could have protected against.”

“Things can happen to anyone. If someone broke into your house and fell down the stairs, they can sue you,” he said, citing what most people would consider a particularly unfair example of liability. “You have to consider the potential impact of what could happen in a life-changing event, in a lawsuit, when you find yourself in a hole for something that insurance could have protected against.”

Perhaps the most compelling aspect of an umbrella policy is its cost — maybe $300 to $400 per year for $1 million in coverage, with additional layers of coverage available beyond that, typically in increments of $1 million.

“In its most basic form, an umbrella policy is an additional layer of liability insurance,” Lee said. “It’s additional layers above and beyond the primary, underlying policy, and its intent is to protect against catastrophic losses that exhaust that primary policy’s limits.

“If I have, say, $1 million in underlying protection, general liability, and I have an accidental death in an auto claim that comes to be a judgment of $3 million, that would exhaust the primary underlying policy, and I would look for that $2 million above and beyond that. The umbrella policy is really just an additional layer of liability.”

Contact a Pearson Wallace Insurance agent now to review your existing policies to see if an Umbrella Insurance policy is right for you.