Umbrella liability policy offers additional security

When people review their insurance coverages, most focus on property limits or deductibles and often overlook the most important element of their contract the liability coverage.

The state of Missouri's financial responsibility law requires motorists to provide liability protection in the amounts of $25,000 per person, $50,000 per accident, and $10,000 property damage. Although this is a starting point, these limits of liability are grossly inadequate for most people.

In fact, from January to April of 1999, Springfield had 701 injury accidents, some of which far exceeded the state minimum limits in terms of damages.

Even though it would be a real hardship, most of us could eventually replace a vehicle or sustain damage to our home or business. But the event we are held responsible for someone's injuries in an auto accident or home/workplace incident, it could devastate our current assets as well as impact our future earnings.

Business owners and managers are especially susceptible to legal action. You don't have be a millionaire to be sued like one.

Here are some real examples of losses awarded to injured parties in accidents:

?$4 million to the families of three people who were killed when struck by a runaway trailer.

?$1 million to a claimant struck in the eye by a piece of rotating stock from a machine designed and sold by a small business.

?$2.3 million to the families of six people killed when a driver went left of center and hit an oncoming car.

?$6.1 million to an automobile accident victim who suffered brain damage.

?$2.5 million to property owners for damage caused by a contractor's employee.

Settlements like these show it's not just the large corporations that should consider high liability limits. Recently, 100 million lawsuits were filed in state courts in one year, resulting in 11 percent of verdicts in personal injury cases exceeding $1 million.

A way to protect yourself is the purchase of an umbrella liability policy. One thing to remember is that a personal umbrella policy will not cover business endeavors and a business umbrella will not cover personal risks.

A personal umbrella provides you with liability coverage for damages for which you or members of your household may be legally liable. Some of the coverages typically provided under a personal umbrella include:

?Personal injury. This coverage applies in the event you are liable for someone being injured on your property. It also applies in other situations, such as lawsuits involving accusations of libel, slander or infliction of bodily injury.

?Not-for-profit directors and officers coverage. This coverage applies in the event you are personally liable for personal injury or property damage resulting from your participation on the board of a not-for-profit corporation or organization. This typically includes religious, charitable and civic organizations, as well.

?Worldwide automobile rental. When you rent a vehicle on vacation, this coverage protects you for personal injury and property damage.

?Defense costs. Unfortunately, lawsuits are more prevalent today than ever before. Legal defense costs can mount up in a hurry, even outstripping actual damages awarded.

The personal umbrella or excess policy normally provides this additional liability coverage on top of auto, home, boat and other personal exposures. The coverage is normally purchased in million dollar increments.

Although cost varies depending on the number of vehicles, experience of drivers, etc., a $1 million personal umbrella normally runs about $150.

When reviewing your personal insurance contracts, be sure to consider what liability limits would protect both your current assets as well as future earnings. Many times an umbrella policy can be a cost-effective way to protect both.

(Richard Ollis is a commercial insurance specialist with Ollis & Company Insurors.)