Umbrella insurance policies rise in popularity
Q. My wife and I don’t feel rich, but we have about $200,000 in equity in our home and a sizable amount of money in a retirement fund and other investments that we cannot touch for several years. Our insurance agent has suggested that we buy a $1 million umbrella insurance policy to protect our assets in case we ever get sued. Is buying an umbrella policy a good idea?
A. Based on the information that your letter provided, getting an umbrella insurance policy would likely be a wise decision. A growing number of homeowners are purchasing umbrella liability coverage, in part because the cost is relatively low, and jury awards in even the most ridiculous lawsuits have been skyrocketing.
Coverage from an umbrella policy usually takes effect if you’re hit with a claim that your other insurers will not pay or if the claim exceeds the amount those other policies provide. For example, if the neighborhood mailman tripped on your front porch and won a $500,000 judgment, but your standard homeowners policy provided only $300,000 of protection, the umbrella policy could help pay the difference.
Without the umbrella coverage, you would have to pay the shortfall out of your own pocket or could even be forced to sell your home in order to settle the debt.
Umbrella policies get their name because they can provide protection against many different types of claims. For example, they can often be tapped to pay for a major accident that exceeds your automobile policy’s limits or even if someone successfully sues you for libel or slander. Umbrella policies usually cost a few hundred dollars for the first $1 million in coverage, then $75 or so for each additional million, according to the nonprofit Insurance Information Institute.
Though your letter states that you and your wife don’t feel rich, the fact that your home is worth a lot more than you paid for it and you have quite a bit tucked away in savings suggests that purchasing an umbrella insurance might be a good idea. Visit the Insurance Information Institute’s website at iii.org to learn more about umbrella policies and other types of coverage. Then if you decide to purchase a policy, call at least two or three insurers and independent brokers (in addition to the one that you already have) to find the best deal.
REAL ESTATE TRIVIA
The 5,965 insurance companies in the U.S. and its territories last year notched an after-tax profit of $61.4 billion, according to data-analysis firm Verisk.
Q. What is dual agency?
A. It’s a situation in which one agent represents both parties in a real estate transaction, rather than one representing the seller and another the buyer.
Q. Our home is scheduled to be tented and fumigated for termites about a month from now. What stuff in our house can stay inside during the fumigation, and what items will need to be removed?
A. The company that performs the fumigation — which involves the careful use of poisonous gas — will likely provide you with a list of what can stay and what must be removed, as well as special pesticide-proof bags for the stuff that can stay inside.
Pest-control giant Orkin states that food for people and pets alike can remain in the home if it is in plastic, glass or metal bottles, cans or jars — but only if they have the original manufacturer’s air-tight seal intact. If they aren’t sealed, they must be removed or put in the special bags provided by your fumigator.
Dry goods packaged in plastic bags or cardboard boxes also need to be removed from the premises or put in the special bags, even if they haven’t been opened. These items include cereal, chips, rice and the like.
Mattresses sealed in plastic, such as baby mattresses, must be removed or the waterproof covers must be removed or opened. You should also open or remove any plastic covers that you might have on chairs, sofas and other furniture.
Remove all plants from inside the house and any outdoor areas that will be covered by the fumigation tent to avoid damage from the gas. Any bushes around the house should be trimmed to allow room to secure the tent between the house and the shrubbery.
Expect someone from the local gas company to turn off the gas line to your house the day before fumigation begins. And of course, you’ll have to make plans to stay somewhere else for at least two or three days until the fumigation is over and the air inside your home clears.
To ensure that you’re fully prepared for the fumigation, contact your pest-control company soon to find out if it has additional suggestions or requests.
Send questions to David Myers, P.O. Box 4405, Culver City, CA 90231-2960, and we’ll try to respond in a future column.
Coverage from an umbrella policy usually takes effect if you're hit with a claim that your other insurers will not pay or it the claim exceeds the amount those other policies provide... Without the umbrella coverage, you would have to pay the shortfall out of your own pocket or could even be forced to sell your home in order to settle the debt. - David Myers About Real Estate