The Mighty Texas Personal Umbrella Policy

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A better understanding of the personal umbrella policy here in Texas.

Thursday, October 05, 2006

Texas Personal Umbrella Policy, Who Needs One?

So, who really needs a personal umbrella policy? There are a few things to consider when making that decision.

First, can you afford the risking of losing your assets or future wages due to a large liability loss?
If you are a self-employed business owner, and PUP is something that you might want to look into. If you are sued for a large liability loss your business could be in jeopardy. Your house is another asset that you can’t afford to lose. (In Texas we have the Homestead Act that prevents us losing our home in lawsuits.) Your future wages suffer tremendously because of a burden like a lawsuit.

Second, are you at risk of being sued?
Having teenage drivers on your auto policy creates one the most high-risk situations of being sued. They have little driving experience and have not yet developed ideal defensive driving skills. At your home, you probably have a pool or a trampoline. Those are attractive nuisances, especially to children and teenagers.

Third, what is the difference in cost to raise your liability limits in the underlying policies and the cost of an umbrella policy?
For example, let’s say it’s going to cost you $40 more every six months to raise your liability limits on your vehicle. That is about $6 or $7 more a month on your auto policy. Generally on a home policy there is a minimum of $10 or $15 difference a year to raise your limits. That’s less than a $2 a month. Generally speaking a PUP can cost an average of $200-$230 a year. Which is about $20 dollars a month on your PUP. So, in this scenario, the total of $9 increases plus $20. This would be a great opportunity to get a personal umbrella policy.

Fourth, know your gaps.
You have to consider two types of gaps:
Coverage gap-personal injury liabilities from charges resulting from libel, slander and invasion of privacy are not usually covered on your property policy.
Limits Gap-A person could get sued for more that the limits on the underlying policies. (Ex. auto and home)

If any of these are of concern and then a person umbrella policy is highly recommended.

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