If you regularly visit your claims broker, you may have been approached a number of times about your need for a PLUP. What is a PLUP you ask? It is an acronym for a Personal Liability Umbrella Policy. You may be thinking, “Why do I need an insurance policy to cover the damage I might cause with my umbrella? That seems strange…”
While the accidental damage you cause with a personal umbrella would be covered by an umbrella policy, that is not the meaning of the term. An umbrella policy was created because of the way it protects everything under it. In this case, you protect your assets against an excessive claim for which you could be held personally liable. Here’s an example:
You decide to have a small gathering to have a barbecue and celebrate the beginning of summer. You already want to make some repairs to your deck, but nothing major. A few friends come over, and a few acquaintances you don’t know very well. While you stand with your back to the barbecue, one of the acquaintances trips against the deck railing. It gives way and he falls two stories to the patio below. Seriously injured, you call 911 and an ambulance arrives to treat him. You later find out that he has severe neck and head trauma and will never recover. His family is suing you for medical bills and personal damages. Yes, you have homeowners insurance with some liability coverage, but the medical bills and personal damages they seek run into the hundreds of thousands of dollars.
What are you doing?
Normally you seek out the best lawyers you can find and try to negotiate an out-of-court settlement, hopefully not losing all your assets to pay for the family or legal fees. It’s a nightmare scenario that most people think will never happen to them. Unfortunately, this is just one of many types of situations where a simple mistake, slight negligence, or even an action by your underage children can cost you your savings and more.
An umbrella personal liability policy is an inexpensive way to better protect your assets, costing about $250 per year per $1 million in coverage. Usually they are issued with a protection of at least $1 million and their policy limits can be much higher if you want them to. The insurance company will require you to carry higher underlying limits of liability protection on your home/car policies, but this is usually a good idea anyway.
If a major liability claim does arise, the insurance company will provide attorneys and work on your (and theirs) behalf to defend you as best it can. Of course, every company is different and you should thoroughly research your specific situation and the specifics of the policy yourself before deciding to buy anything.
Given the sue happy culture we live in, a PLUP can be a cost-effective risk management tool that protects your nest egg from a simple mistake. We often talk to our clients about adding a PLUP to their insurance portfolio and we wanted to pass that message on to you.