When It Rains, It Pours—the Importance Of Umbrella Insurance


family under umbrella

Coverage limits on an umbrella insurance policy typically start at $1 million, and can go up to $10 million. When purchasing this coverage, it is important to get both a liability umbrella and an uninsured/underinsured umbrella. The liability umbrella will protect your assets, but it is the UIM umbrella that will protect your family from the bad drivers on the roadways.

The price of umbrella insurance is surprisingly reasonable. Typically, a $1 million policy costs around $300 per year. A $3 million policy will cost less than three times the cost of a $1 million policy, and is usually under $500 per year.

12.5% of drivers on Ohio roadways are uninsured. Another 5% have only state minimum coverage. We see it all the time. A client is badly hurt due to someone else’s carelessness. The wrongdoer has no insurance or has only state minimum coverage ($25,000 per person). In the cases where the wrongdoer has no insurance, our client’s recovery is limited to his or her own uninsured motorist policy. If he or she doesn’t have an uninsured motorist policy, often there is no means for recovery. In the cases where the wrongdoer has state minimum coverage, our client’s recovery is usually limited to the $25,000 policy plus any underinsured motorist policy he or she may have.

Damages in car collisions include medical bills, lost wages, future medical treatment, future loss of earnings, physical pain, mental suffering, and past and future inability to perform usual activities. The total of these damages can exceed a state minimum policy in even a minor collision. In a major collision, with significant injury and permanent disability, these damages can exceed seven figures.

An umbrella policy can protect you in two important ways. Let’s consider two scenarios:

A. You are driving at a speed of 50 mph, you see a billboard that distracts your attention from the roadway. You don’t see that traffic ahead has stopped and you rear end another driver. The man you hit suffers a broken collar bone, a severe concussion, and broken wrist. Both the collar bone and the wrist injuries require surgery. The man’s medical bills exceed $75,000. The injured man misses work for four months and has lost wages of $15,000. You have a liability policy of $100,000, but no umbrella policy.

B. Your spouse is hit head on by a young driver who is texting and driving. Your spouse suffers several broken bones, internal injuries and has several teeth knocked out. A week in the hospital and several weeks in a rehabilitation nursing facility results in medical bills of more than $200,000. The young driver who hit your spouse has a state minimum policy of $25,000 and no assets. You have an underinsured motorist policy of $100,000 but no umbrella policy.

In scenario A, the injured man will recover your $100,000 policy. In addition, he will have the right to sue you for his damages exceeding $100,000. Your home, assets and income will be used to satisfy any damages above your insurance policy.

In scenario B, your spouse will recover the $25,000 policy from the wrongdoer, and will recover $75,000 from your underinsured motorist policy ($100,000 less the amount recovered from the wrongdoer). This money will be used to pay your spouse’s medical bills. You will be responsible for the remainder of the medical bills. Your spouse will not be compensated for his or her other harms and losses.

Suppose you had a $1,000,000 umbrella policy. in scenario A, the policy would be used to cover the injured man’s excess damages. In scenario B, the policy would be used to compensate your spouse for the extent of his or her harms and losses.

Your Insurance agent may not have offered you an umbrella policy or explained what one is when you purchased your insurance. Call your agent today and ask for a quote. Be sure to specify that you want an uninsured/underinsured umbrella and not just a liability umbrella. Like an umbrella on a rainy day, you will be relieved to have it when you need it.

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Rinehardt Injury Attorneys
8351 N. High St, Ste 251,
Columbus, OH 43235
Phone Number: (614) 686-2020
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