Need an umbrella? It's a million dollar question! – TrueNorth Companies, LIVING WELL Magazine

Need an umbrella?

It’s a million dollar question!

By Sue Erbes, VP of Operations Risk Management, TrueNorth Companies, LIVING WELL Magazine

When you think about the purpose of an ordinary umbrella, you picture it protecting you against rain or sunlight. When we’re talking about an insurance umbrella, we’re talking about a very different kind of protection. An insurance umbrella is a liability policy that protects your assets and future income above the standard liability limits of your other policies. We call it an “umbrella” because it covers liability claims from all policies underneath it: your homeowners, auto, boats, motorcycle…

An example: You are parked at the local convenience store. You are distracted and put the car in “drive” instead of “reverse” and hit the gas. Your car plows through the front of the store and damages the building and inventory. One of the customers is hurt and requires medical attention. The business is forced to shut down for a few days while repairs are made. The total cost of repairs, loss of business, and medical care is close to $600,000. If you carried the highest limits available, your auto policy would only cover up to $500,000. An umbrella policy would pick up the additional amount. Umbrella policies are usually purchased in million dollar increments and are in addition to your other liability limits.

Who needs one?

Some people believe they need a personal umbrella only if they have a million dollars in the bank.  Not true…

A single lawsuit could threaten your current and future earnings. It could eat up your retirement funds. An accident where you injure a wage earner who can no longer earn money to support their family could have you paying out of your pocket for the next 20 years.

Bonus protection

The umbrella policy also comes with some extra coverages that are not included in your other liability protection. They include false arrest, libel, slander, and invasion of privacy and that could include damages involving social media. We’ve all heard stories about people being fired or having their personal reputation damaged as a result of postings on Facebook or similar sites. What if a member of your family posts something that causes someone to be fired? It’s only a matter of time before a judge finds that a person is entitled to recover financially because they can no longer secure a job in their field as a result of something that appeared in social media. An umbrella could offer protection against those types of claims.

One of the main purposes of insurance is to protect you against large losses. Reduce the likelihood that you will suffer a catastrophic financial loss. Umbrella policies are a good insurance buy at less than $1 a day. Call your agent to find out how you can add an umbrella policy.

Sue Erbes is the vice president of Risk Management Operations at TrueNorth Companies, 500 1st St SE, Cedar Rapids, IA 52401. Reach our specialists at 319-364-5193 or via