How safe is your household? Do you have enough insurance to protect your assets in the event you are liable for an auto accident or injury at your home? When an injured party has significant injuries, requires ongoing treatment, has lost income, or has incurred significant property damage, he/she will look to the responsible party to be made whole.
Virginia drivers are often underinsured and are increasingly at risk for exposure of their assets. The statistics are sobering:
- Medical costs continue to be the single largest source of bankruptcies in this country.
- For the first time in decades there has been a sharp increase in the number of auto fatalities in the United States, especially in this region.
- While learning to drive continues to be a rite of passage in this country, nearly 8,000 people are killed in crashes involving drivers ages 16 to 20 and auto crashes continue to be the leading cause of death for teens.
- Teen drivers account for 30% or $19 billion of the total costs of motor vehicle injuries.
There is cause for concern for mature drivers as well. As our population continues to age, more people are driving well into their eighties and nineties. The Division of Motor Vehicles has no independent ability to confirm the physical fitness of a licensed individual to drive other than a vision test. Elderly drivers—and their families—have additional concerns. Married couples in Virginia hold title to their homes as “tenants by the entirety” so ownership or title conveys to the surviving spouse immediately upon the death of their spouse. Should the surviving spouse be held responsible for bodily injury or property damage to another, solely owned assets may be at risk and potentially unavailable for the care and well-being of the surviving spouse.
Personal Umbrella Insurance Policies Protect Assets
Many auto and homeowner insurance companies offer an extra layer of liability coverage through umbrella liability insurance policies. Umbrella policies are designed to augment an individual’s liability insurance coverage by providing additional coverage for injuries resulting from a car or boat accident, or personal injury due to fire, or slip and fall injuries at your home. Umbrella policies also provide additional protection for lawsuits, including legal defense costs. Personal and business owner liability policies are broader and include coverage to covered persons and their employees or the named corporation and its executive officers, directors, and stockholders when acting within the scope of their duties.
Umbrella liability policies are surprisingly affordable, but require that a policyholder maintains certain limits of coverage on their underlying auto liability policy. An applicant with a favorable driving history purchasing $1 million in umbrella coverage should expect to pay, on average, $200 annually, but can request higher limits for an additional cost. Annual renewals require policy holders to provide updates on the number of autos, boats, and personal recreational vehicles in the household, as well as personal information for each driver.
Excess Uninsured and Underinsured Motorist Coverage
Do you have the financial resources to maintain your household if you or a family member receives significant injuries? A standard umbrella policy protects your assets, but an excess uninsured/underinsured umbrella policy also protects your family in the event another party is responsible for causing you or your family member bodily injury or property damage in an auto crash. If the responsible party is uninsured or lacks sufficient coverage for your damages, this coverage may be available to satisfy claims or judgments for your losses.
While your agent can determine your risks/exposure and assist you with umbrella coverage, take these additional steps to ensure you have proper coverage:
- Talk to your agent and provide periodic updates regarding your household including new drivers, family members who have left or now reside in your home, (divorce, separation, child sharing, etc.); properties you have purchased and their intended use; and new businesses, pets, autos, boats, trailers, and any gaps that may exist.
- Read your policy when it arrives and circle or highlight numbers, words, or phrases you do not understand or which appear at odds with the requested coverage. Insurance policies are contracts with definitions and terms that control your coverage and exclusions.
- Discuss insurance needs with your attorney when undertaking estate planning, divorce, or planning a new business.
- Review your coverage annually.
- Never change insurance providers for cost reasons alone. Always confirm that any potential replacement coverage truly replaces or enhances the insurance coverage in place. The true costs of your insurance will not be known until you need it.
Susan F. Pierce, partner with Walker Jones, PC in Warrenton, Virginia and Washington, Virginia, has more than 25 years of personal injury legal experience. She is an AV-rated attorney chosen as 2015 Women Leaders in Law by Fortune Magazine, Top-Rated Lawyer for the Washington, D.C. Area in 2015 by The Wall Street Journal, and Virginia Super Lawyer 2016. Contact Susan Pierce at 540.347.9223 or firstname.lastname@example.org.
- The National Highway Traffic Safety Administration (NHTSA) reported a 12% increase in traffic fatalities in Region 3 which includes Virginia. The final data for 2014 and 2015 will be available late fall 2016.
- Association for Safe International Road Travel 2016 figures.
- Centers for Disease Control and Prevention (CDC) Teen Drivers: Get the Facts. Figures are cited for 2013.