With lawsuits and jury awards rising, a growing number of homeowners and renters are buying umbrella insurance policies that can provide protection against a variety of claims.
Q-I have a lot of equity in my home and quite a bit of money tucked away in savings. My insurance agent suggested that I purchase a $1 million personal umbrella liability policy, but I’m not sure if I really need it. What do you think?
A-It’s difficult to answer your question without knowing more about your present insurance coverage, but a rising number of homeowners have been purchasing umbrella policies because their annual premiums are relatively low and jury awards are skyrocketing.
An umbrella policy usually kicks in if you’re hit with a claim that your other insurance policies won’t pay or if the claim exceeds the limits of the coverage those other policies provide. For example, if your postal carrier won a $500,000 jury award against you after tripping on your front porch but your primary homeowners policy provided only $300,000 in liability protection, the umbrella policy would open up and cover you for the remaining $200,000.
Importantly, umbrella policies provide protection against a variety of other types of claims. For instance, the policy could protect you if you caused a serious car accident, your errant golf ball shattered a church’s stained-glass window, or your child accidentally poked the baby sitter in an eye. Although the chances of facing a bankrupting claim are slim, many people don’t mind paying $100 to $300 a year to have an additional $1 million in insurance protection.
It sounds as if your net worth is fairly high, which makes purchasing an umbrella policy even more attractive because you have a lot more to lose than the typical homeowner.
Before you automatically buy the coverage from your current agent, though, contact at least three other insurance companies and independent agents to see if you can get a better price.
If you’d like to have another objective opinion before deciding whether you need an umbrella policy, call the nonprofit National Insurance Consumer Helpline at (800) 942-4242 and talk to one of the group’s experts. The helpline is a free service that is funded by the insurance industry, but its representatives don’t subject callers to a high-pressure sales pitch. I have called the helpline several times myself to get free advice on a variety of insurance-related issues.
Q-My fiancee and I are planning to buy a new home together, but we plan to keep separate checking accounts after we move in. We will each be responsible for half the monthly mortgage payment. Will lenders accept two checks for each monthly payment, or do they insist on getting only one?
A-Payment policies vary from one institution to the next, but you probably won’t have much trouble finding a lender willing to accept your separate monthly checks.
Many couples prefer to keep separate checking accounts after they get married because it gives them a sense of financial privacy and can avoid arguments over how they spend their money. But newlyweds who purchase a house should also establish a joint account for paying their household bills.
Although your lender might not mind accepting two separate checks for the mortgage payment, writing and mailing dual checks for half the amount of all the home-related bills you will have to pay-not just for the mortgage, but for utilities, insurance and the like -could create an accounting nightmare for both you and your soon-to-be wife. If the two of you are planning to file a joint tax return, such an unusual arrangement might even arouse the suspicion of auditors at the Internal Revenue Service.
It’s OK for you and your fiancee to keep your separate checking accounts, but establishing a new joint account to pay your household bills could prevent a lot of headaches down the road.
Q-I rent a house, and it seems like something new goes wrong with the place every week. Who is responsible for fixing problems, me or my landlord?
A-Laws that govern rental agreements vary from state to state and, in some cases, even vary from one city to the next. As a general rule, landlords are responsible for keeping the property they rent to tenants in a “safe, sanitary, and habitable” condition-but that doesn’t necessarily obligate your landlord to repair everything that is wrong with the home that you are renting now.
For example, your landlord must pay to repair or replace a toilet and broken garbage disposal if their problems were caused by aging or normal wear and tear, but you will have to foot the bill if those troubles arose if you (or a child) dropped something down there that doesn’t “belong,” such as a small toy or metal object.
More than likely, your landlord has to pay to repair your leaky roof and for any damage water has caused to your personal possessions, or you can seek reimbursement for those damages under your renters insurance policy. Contact your local rent board or similar government agency to discuss your particular problems and to get solutions without hauling your landlord into court.
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Write to David Myers at P.O. Box 2960, Culver City, Calif. 90231-2960.
