When we think of catastrophic claims we often refer back to hurricane devastated areas like Louisiana. Those certainly are the worst of the worst.
However, those Cat claims are on a larger scale than what we are referring to in this article. There are certain catastrophic claims that can potentially ruin a person financially.
A catastrophic claim can involve only a couple people. In the insurance industry that may refer to a person who, while driving, hits another vehicle or pedestrian and causes severe injury or death.
It can involve a swimming pool drowning or pool accident that involves a guest while at your home, or a trampoline accident that causes severe injury, or even a dog bite.
You likely have LIABILITY and MEDICAL coverage on your homeowner's policy. How much? When is the last time you checked or reviewed your home policy?
Have you EVER asked your agent about your Liability and Medical coverage limits? After many years in the insurance business I can tell you that very few clients EVER ask about those two items.
Yet, they usually expect any and all related claims to be covered fully, and only because of a lack of knowledge.
The reality is Liability and Medical coverage have limits. Many consumers have the basic 100,000 Liability and 1,000 Medical.
You might be surprised to find that the cost to increase Liability and Medical up to 500,000/10,000 is perhaps 50 per year.
Let's consider the difference in coverage if you had a catastrophic claim.
Say you are driving and hit someone on a bicycle or while walking, or another driver with three passengers. There severe injuries, perhaps someone dies.
Your policy will pay for court costs and attorney fees. Liability and Medical will cover the adverse party's claims for medical bills, rehabilitation costs and lost income. But what about their long term disability? Or if they die, the income loss to their family?
Once your policy limits are exhausted, the adverse party has one route - to sue you personally and seek access to your assets and future income. Do you really want to risk part of your income to garnishment?
It is foolish to rely soley upon the Liability and Medical coverage provided under your home policy, especially if you own a home, have savings or other assets, and earn a decent income.
Most people should have an UMBRELLA policy. This coverage extends over and above whatever your auto policy or home policy pays.
A 1,000,000 Umbrella may cost as little as 300 per year.
Insurance Phoenix
