$tarrBuck Report for September 17, 2006: Let Your Umbrella Be Your Smile

September 17, 2006

$tarrBuck Report for September 17, 2006:  Let Your Umbrella Be Your Smile

by R. M. Starr

Stacey:  Goodbye darling, have a great day!

Richard:   See you later, I’ll be late this evening!

Stacey:  Got your jacket? Lunch?  Textbooks?

Richard:  Yeah, it’s all here.

Stacey:  What about your umbrella?

Richard: Stacey, Honey, it’s not raining.  The forecast says 0% chance.

Stacey:  No, Honey.  You still haven’t bought that insurance, have you?  That’s really a needless risk.

Richard:  Stacey, Honey.  You’re talking in riddles.

Stacey:  I told you to buy umbrella insurance.  At my firm, Dewey Cheatem and Howe LLP, we’re very careful of guys with that coverage.  They have deep pockets to mount a defense.

Richard:  What does your firm have to do with insuring my umbrella?   It’s not even a rare umbrella — I got it at Macy’s.

Stacey:  Richard, darling, my slow-learning angel,  it’s personal liability umbrella insurance.  “Umbrella” means that it covers all risks.  Well not really all.  They list the ones they won’t cover.  Your employer’s liability insurance should cover work-related liability. But any time someone threatens to sue you, like for slander or sexual harassment or for an accident for more than your automobile policy covers, that’s when the umbrella policy kicks in.

Richard:  Sexual harassment — not that I ever would — but isn’t that my employer’s risk?

Stacey:  Darling.  You haven’t been listening.  At Dewey Cheatem and Howe LLP we deal with that all the time.  Individual liability is a serious issue with regard to sexual
harassment. Under many state laws, individuals do have liability, and it is
common for supervisors, managers, or team leaders to be named in claims. Juries have awarded damages against individual supervisors (as well as other employees) for individual acts of sexual harassment.
Your employer may  provide a legal defense for you.  But they don’t have to repay you (we call it “indemnify”) if you’re found liable.

Richard:  That’s the pits.  This insurance sounds good.  The insurance company provides the defense and pays the damages?

Stacey:  You got it.  You’re not such a slow learner after all.

Richard:  Well now I am.  I’m going to be late for class.  Later, darling.

Stacey has it right.  A personal liability umbrella policy covers you against virtually all damages you may become legally obliged to pay.  The umbrella insuror will probably require that you carry automobile and homeowner’s liability insurance with them for high coverage.  Then the umbrella policy kicks in.  Up to several million dollars.

The exclusions are spelled out.  Any personal liability not specifically excluded is covered by an umbrella policy.  That includes claims of libel, defamation, slander,  automobile liability outside of USA, sexual harassment.  It excludes malpractice of a business or profession and criminal acts.

If you have very little wealth or income, then there’s no point in carrying umbrella insurance;  you’re judgment proof.  But if you have significant income or wealth, someone (either greedy or crazy or injured) may try to sue  you for much more than your primary insurance (homeowner’s and automobile) covers, or for risks, like libel, that they don’t cover at all.  Then it’s time for an umbrella policy.

Check it out.

(c) R. M. Starr 2006


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