When Umbrella Liability Insurance Isn't Enough
By Ric Edelman
Are you willing to do what it takes to protect yourself?
Umbrella liability insurance is a great financial tool. For just a few hundred dollars a year, you can buy a $1 million policy to help protect you financially from lawsuits. Should your dog bite the mailman, a guest fall down your stairs or a child slip while climbing a tree in your backyard, you’re typically covered by these policies.
But the policies are not always enough.
Indeed, 14% of plaintiff awards exceed $1 million, according to 2010 data from Jury Verdict Research and Ace Private Risk Services. If you can’t imagine yourself in a situation where your umbrella liability policy isn’t enough, ask yourself if you own any of the following:
• liquor cabinet
• scuba gear
• swimming pool
• snorkeling gear
If you have any of these in your home, you may want to ask an attorney to provide you with a Waiver of Liability agreement. Require anyone visiting your home to sign this document, for it absolves you of any liability in the event someone gets hurt while on your property or using your equipment.
Ask a friend or relative to sign a legal waiver upon entering your home? Is Ric crazy?
Before you dismiss this idea, consider the last time you did anything remotely dangerous, such as skiing, scuba diving, zip lining or test driving a car on a race track. In every case, I bet the business owner required you to sign a waiver acknowledging the risk of physical harm and absolving the operator of any and all liability associated with that activity.
So why would a friend object to signing the same type of form before you let his child use your jet ski or swim in your pool?
Don’t assume your friends would never sue you. Consider these recent court verdicts, reported by Jury Verdict Research and Ace Private Risk Services:
$49 million judgment. A 21-yearold was the passenger in an auto accident that left him needing 24-hour care for the rest of his life. His family sued the two drivers, claiming one was sleep-deprived and the other was on a cell phone.
$20 million judgment. A neighbor invited a teenager to ride his ATV on his property, but didn’t supervise him or give him any safety equipment. The teen struck a fence and was decapitated.
$10 million judgment. A snowmobile driver in Yellowstone Park struck another person, seriously injuring him.
$6 million judgment. A family friend’s dog attacked and killed a 16-month-old child.
$5 million judgment. A 55-year-old cyclist was killed when a motorist didn’t stop at a stop sign.
$2.5 million judgment. Two teens on the way home from a party, where parents were supervising and alcohol was served without the parents’ knowledge, were in an accident, one paralyzed from the chest down as a result.
$2.3 million judgment. An 11-yearold boy was kicked in the face by a horse. The stable owners were found responsible due to negligent supervision.
$1 million judgment. An adult neighbor was babysitting a 10-year old boy, who wandered off to another yard to go swimming and drowned.
These are extreme examples, but they happened to somebody. Don’t let that somebody be you. Consider having guests sign a liability waiver. And if you don’t already have an umbrella liability policy, talk to your financial planner about getting one.