A New Umbrella

If you get caught in a downpour without an umbrella, it’s no fun, but the raindrops do little damage. However, if you find yourself suddenly liable for another person’s injury or major property damage, not having an umbrella insurance policy may prove catastrophic.

“You don’t have to be a millionaire to be sued like one,” says B.J. Donaldson, vice president of underwriting at Texas Farm Bureau Insurance. And if you do have a net worth of a million or more, an umbrella policy can protect assets, your lifestyle —and ultimately your financial legacy.

How Umbrella Policies Work

At home or driving a car, you could find yourself at fault for accidents you can’t even imagine. “Accidents are always unexpected,” says David Bruton, a Texas Farm Bureau Insurance Agent based in Kendall County who has more than 37 years of experience in the insurance industry. Personal umbrella policies provide a well of funds to draw on if you must pay damages to someone — once you’ve exhausted the upper liability limits of your home or auto policy. Bruton adds that in today’s litigiousminded society, some people may take advantage of a minor accident to claim frivolous or extraordinary damages. “People bring suit at the drop of a hat these days,” he says. “Then there are those who have truly undergone serious bodily injury or physical loss that deserve compensation. An umbrella policy helps your insurer pay, and you want that.”

New Risks in a New Day

A new home, a new sailboat, and a huge payday on a stock sale — they’re all reasons to reconsider your net worth and make sure you have enough protection. Having a pool, a dog that nips at people, a treehouse, or a teenage driver — all things that put your family at greater risk. Internet access opens families up to liability unheard of five or 10 years ago, Donaldson says. After all, parents can’t control what their teens might post on the latest social media network, or what video they make that may go viral. Umbrellas not only protect assets and lower exposure to risk, they also can cover costs stemming from litigation, Donaldson notes. “Legal fees add up —even if you win,” he says, adding that if you lose, damages awarded can take your current assets and even future income. You want to keep your house. You want to be able to pay your bills. You want to keep sending your kids to their private school or taking vacations. “An umbrella is really about protecting your standard of living,” Bruton says. “In Boerne, there are some ranches that have been in the family for four generations. You sure don’t want to lose that land because you made one wrong turn.”

How Much Security Costs

The Insurance Information Institute estimates that an umbrella policy costs between $150 and $300 annually for the first $1 million in coverage and about $75 for the next $1 million.

Donaldson estimates that at Texas Farm Bureau Insurance, $1 million in personal umbrella coverage for an estate with a home and two automobiles could run about $220 annually — about the cost of a dinner for four at a nice restaurant on a special occasion. “It’s an inexpensive way for you to protect yourself against a devastating lawsuit,” Donaldson says. (Coverage and discounts are subject to qualifications, and policy terms and may vary by situation. ) Because umbrellas can provide such stability to members’ financial position, Texas Farm Bureau Insurance is increasing its umbrella-policy training for agents and urging members to determine if such a policy could benefit them. “Just have your agent assess your situation and make a suggestion about how much coverage you might need,” Bruton says.