January 29, 2015

Stephen King Horror Moment – the Importance of the Umbrella

In Financial Planning, Insurance

Have you ever sent a text message while driving? Taken a phone call in the car and your Bluetooth didn’t sync – phone held up to your ear – multi-tasking, juggling work, family and deadlines? In the blink of an eye, perhaps traffic stops, a motorist swerves, a pedestrian pops out unexpectedly and you’re responsible for a significant accident. The injured party sent by ambulance to the Emergency Room, perhaps multiple surgeries, multi-year rehabilitation and then a law suit ensues, totaling millions.

Another not uncommon scenario: a young, inexperienced driver, making a poor judgment call to impress a date, change the music, chat with a friend in the back seat (or… insert any number of scenarios here) and in a heartbeat, an accident, that instantly changes lives.

Is it at that moment that you dig into your personal insurance policies – frantically hoping that you have an umbrella policy? Is at that moment you speed dial your Relationship Manager at Coldstream asking if you have an umbrella policy? Do you remember reviewing your umbrella limits at your periodic portfolio review?

The umbrella policy provides an all-important additional layer of coverage when your auto or home or boat policy limits or other personal insurance policy limits are exhausted.

Recently Seattle City Councilmember Sally Clark hit a cyclist while driving her personal car and was named in a lawsuit; the cyclist had the right away and Sally Clark turned left into his path and crushed him. Clark checked her policy limits after the accident and learned that she only had $25,000 of coverage. The Seattle Times reports ‘she had not checked her limits in a long time, is not proud of where they were at the time, and urged people to check their coverage.’

The New York Times recently reported that 90% of highly successful individuals are underinsured, too little coverage was sold from the get-go, while over time the assets have grown and the umbrella limit was never revisited.

Coldstream’s insurance unit FIT Insurance Inc. specializes in reviewing the insurance coverage in place for Coldstream clients. In 2014 we launched Coldstream’s Group Umbrella policy – with coverage limits ranging from $5 million to $50 million. And, unlike many other umbrella policies, it provides broader coverage, is typically less expensive and includes the option of adding coverage for Uninsured and Underinsured third party drivers, not-for-profit board service and employment practices. Just like a group medical policy, the coverage is based on the risk characteristics of the group (Coldstream’s families): highly successful individuals, often with young drivers, significant assets, multiple cars, homes, boats and more. And like a group medical policy, the pricing is typically less expensive than the individual marketplace thereby allowing you to leverage your purchasing power as a client of Coldstream for improved coverage and more attractive unit costs.

Unlike traditional umbrella policies, coverage is typically not underwritten by evaluating claims, moving violations, number of homes, or number of cars, all units of risk that in a standard umbrella contribute to the cost and availability. And unlike a standard umbrella policy, there is no need to update the underlying schedule of risk units (did you remember to update your umbrella policy when you purchased a new vehicle?). With Coldstream’s Group Umbrella, updates in vehicles, boats, home are typically not required.

The Coldstream Group Umbrella policy may be written over your existing home and auto coverage with no requirement to replace your existing underlying policies. Often, in the course of our insurance diligence, FIT identifies coverage enhancements and gaps in your existing coverage and may recommend upgrades for your consideration.

The rainy season is here – take action now and check that umbrella policy. Make certain that it’s in place, that the limits are appropriate. Don’t hesitate to reach out to your Coldstream Relationship Manager for assistance in reviewing and evaluating Coldstream’s Group Umbrella policy – they will coordinate with FIT and we’ll have the analysis fast tracked to you promptly.

Happy New Year!

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