By Jeff Jones, MS
Associate Financial Planner
As I’m writing this, the forecast for today is sunny. 80 degrees, a light summer breeze, and not a cloud in the sky! It’s a perfect day for grabbing the Callaways, slipping on your spikes, and getting in a round of golf before lunch. The last thing you are thinking about is grabbing your umbrella on the way out the door. But what if I told you that having your umbrella with you at all times is one of the most important aspect of managing the risks to your hard-earned assets? Of course, I’m not talking about your 62” collegiate football decorated golf umbrella. I’m talking about your personal umbrella policy (PUP).
So what is a personal umbrella policy? A PUP is liability insurance which provides excess liability coverage beyond your auto and homeowner policies. I’ll use an example, albeit an unlikely scenario, to demonstrate the umbrella policy’s usefulness. Let’s say today your slice is particularly prominent. You line up your tee shot on hole 9 which has a number of large estate homes along the right side of the fairway. Your tee shot veers hard into one of those yards and strikes a homeowner as he is waxing his prized 1962 Ferrari, knocking him out and denting his car in the process. This isn’t just any bad day of golfing! It may be sunny out, but it may be raining lawsuits soon. While your homeowner’s insurance coverage may pay for some of the expenses related to you errant tee shot, it may not be enough, and that can leave your assets exposed. Here’s where the umbrella policy comes in. It provides the additional protection to ensure your collective liability coverage protects more of your assets. PUPs are usually purchased in increments of $1 million and premiums are much more affordable than you might expect. A policy will probably cost you less than what you paid for the Big Bertha driver in your golf bag.
Unfortunately, life doesn’t offer many do-overs, and you’ll want to be aware of your PUP’s limitations and exclusions. A PUP will require that you have a minimum level of liability protection provided by the policies for your autos, home, and boat. PUP exclusions include, but are not limited to, the following:
- Damages arising from business pursuits
- Liability associated with recreational vehicles (so make sure your golf cart is included)
- Liability assumed in a contract
- Liability associated with ownership of aircraft
- Liability associated with ownership of watercraft
- Damages to your own property
So, when you’re headed out the door, whether it is to the golf course, the boating docks, or for a bite to eat, make sure you are truly protected. Because even when the sun is shining, you’ll never know when you’ll need an umbrella.
Jeff Jones is a part of the planning team at Longview Financial Advisors in Huntsville, Alabama. He holds a Masters in Financial Planning from the University of Alabama. Jeff can be reached via e-mail at firstname.lastname@example.org.
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