Being held liable for a serious incident such as a boating accident, dog bite or trampoline injury has the potential to cause financial devastation to individuals who are not properly insured. To learn more about how Personal Umbrella & Excess Liability Insurance can help, Crain’s Content Studio spoke with Kate Wright, Associate Vice President, Regional Practice Group Leader, Personal Insurance, Burns & Wilcox, Indianapolis, Indiana.
What are some of the greatest liability risks individuals face today?
K.W.: Every individual has some risk for personal liability, such as auto accidents or someone getting hurt on their property, but the more important factor is who is most at risk for these losses. That really depends on how many assets an individual owns and their lifestyle. The bigger lifestyle that you live, the more exposure you add to that mix and the higher your risk of an accident and a liability.
What should they be aware of relative to these risks?
K.W.: They need to identify their exposures. Pets, for example, are unpredictable and accidents can occur. If your clients have children who are on social media, they can be held liable for their child’s actions. If clients have a pond, pool, or boat, those can also pose a higher liability exposure. They need to seek out a risk consultant or an insurance advisor to help identify those risks. Homeowners Insurance may provide anywhere from $300,000 to $1 million in liability coverage, but oftentimes, that may not be enough.
What insurance policies can help them respond to these threats, and what are the limits and examples of covered expenses?
K.W.: This is where Personal Umbrella & Excess Liability Insurance comes in. It provides bodily injury, personal injury, and property damage coverage beyond what is covered in a standard Homeowners Insurance policy, Watercraft or Auto Insurance policy. If you max out your limits on a standard policy, that is when Personal Umbrella policy kicks in. It can provide excess liability limits from $1 million to $10 million, depending on your overall needs and net worth. There are certain policy conditions that always have to be met, such as maintaining minimum underlying limits with other policies.
What steps should individuals take that would complement insurance coverage from a prevention standpoint?
K.W.: For individuals who own property, a vehicle, or watercraft, there are things they can do to help prevent accidents. Pools should have a locked pool cover and be fenced to prevent small children from being unsupervised in the pool and help prevent swimming accidents. Watercraft owners should take safety courses and provide life jackets. A dog needs a fenced-in space and should be supervised. There are so many things people can do to help prevent injuries.
Can you share an example of a scenario you have dealt with that would be illustrative of the types of risks we are discussing?
K.W.: An individual was involved in a snow skiing accident in which they injured another individual on the mountain. That individual was a surgeon and became paralyzed, losing the ability to continue working and providing for their family because of that accident. The other skier was found to be negligent and the surgeon was awarded $5 million. With a Homeowners Insurance policy with a $500,000 limit and no Personal Umbrella Insurance, they would have been personally responsible for the other $4.5 million. Fortunately, they had a policy that paid out those limits and essentially protected that person’s financial stability and assets.
What are the greatest opportunities for brokers to get into Personal Umbrella & Excess Liability Insurance?
K.W.: I think any insurance broker who is quoting Homeowners or Auto Insurance should automatically have a discussion or offer at minimum a $1 million Personal Umbrella Insurance policy if they own any assets. It is a simple policy and it is affordable.
What advice would you give brokers to increase their success rates with these products?
K.W.: I think talking about the experiences of individuals who have had circumstances where an accident occurred and they had to rely on their Homeowners Insurance to cover the medical payments or property damage that they were liable for is a prime example. Accidents can happen to anyone. This is an extra layer of protection for your assets that you have worked hard for.
What advice would you give brokers on targeting individuals to sell this coverage to?
K.W.: Those that have the highest exposure have more assets. Private client individuals are at a higher exposure because they have more assets and have more to lose from a liability standpoint.
Personal Umbrella & Excess Liability Insurance
Why your clients might need it: To protect against injuries or damage that extend beyond what is covered in a standard Homeowners Insurance Policy, Boat or Auto Insurance policy. Private client individuals are at a higher exposure because they have more assets.
Protects against: It provides bodily injury, personal injury, and property damage coverage.
Expert opinion: “I think any insurance broker who is quoting Homeowners or Auto Insurance should automatically have a discussion or offer at minimum a $1 million Personal Umbrella Insurance policy if they own any assets. It is a simple policy and it is affordable.”