The following list came from a Liberty Mutual Insurance company flyer, but applies anyway.
1 It Protects What’s Most Valuable
An umbrella policy is smart business and provides greater peace of mind. It protects your employees, assets, hard work, reputation, and future.
2 A Million Dollars Isn’t What It Used to Be
Original ISO policy limits were set at $1 million in 1985. In 2015, the coverage equivalent of that limit was just $226,000. The cost of inflation reduced coverage by 77%!
3 Losses Are Increasing
Multimillion-dollar settlements are becoming much more common. Advances in medical technology and prescription drugs have increased the costs of medical care, and new exposures with no historical loss experience (e.g., technology, foreign liability, identity theft, global warming) are on the rise.
4 It Safeguards Against Auto Exposure
Auto crashes are the leading cause of umbrella claims. In the U.S., there’s one auto-related injury every 13 seconds and one fatality every 15 minutes. Cars are just as likely as large trucks to cause a severe accident, and driver distractions are growing due to interactions with phone calls, texting, and GPS.
5 The Worst Can Happen
Every business has a severity exposure:
■ Retail – premises safety
■ Restaurants – foodborne illness
■ Manufacturers – past, present, and future products
■ Warehouses – what is stored and how
■ Hotels – fire, carbon monoxide, crime
■ Contractors – falls from heights, noise, high property values
6 Settlement Awards and Tort Costs Are Rising
Today’s primary limits may not be enough for claims that take years to settle. Even though a claim may take several years to resolve, a jury will often consider an award in “current” dollars.
7 Contractual Requirements Must Be Met
Umbrella policies allow you to respond quickly and more affordably to changes brought about by lease, job site, vendor, and municipal requirements.
8 It Ensures Business Continuity
Legal costs, judgment awards, and settlements outside existing policy limits can cripple a business. Consider who will pay defense costs, manage a large claim, manage a claim in a faraway jurisdiction, and find the right legal experts to handle a complex claim.
9 It’s a Great Value
Umbrella policies offer additional protection at a reasonable cost. Here are some sample losses compared to annual premium:
Type of Loss Loss Amount Umbrella Premium
Auto liability $3.4M $1,845
Hotel fire $5M $4,400
Warehouse fire $7.5M $8,900
10 Deep Pockets Attract Claims
Your business’s prominence can make it a target for legal action, even when there’s a small percentage or question of actual liability.
Not All Umbrellas Are Alike
You’ll be best served by an umbrella provider that knows the ins and outs of large legal and medical scenarios and adds value by showing you how to reduce risk or offering crisis management support.
Call us with any questions at 612-217-0157 H. Ray Alkalai @ Alkalai Financial Group