I got a call from a client last month that I'll never forget. "Marcus," she said, and her voice was shaking. "I just got served. A lawsuit. For $50,000." She's 62, retired teacher, lives in a modest house in Arvada. She has a paid-off car, a small pension, and $80,000 in retirement savings. That $50,000 lawsuit would have wiped out everything.
The lawsuit was from a car accident. She rear-ended someone at a red light. Minor damage, or so she thought. But the other driver claimed whiplash, back injuries, "loss of enjoyment of life." The kind of claims that sound ridiculous until you're the one being sued for them. Her auto insurance had a $100,000 liability limit. The other driver was asking for $150,000. That $50,000 gap? That was her retirement. Her house. Her everything.
But she had an umbrella policy. A $1 million umbrella policy that costs her $280 a year. Less than a dollar a day. And that policy stepped in and covered the $50,000 gap plus legal fees. Her retirement savings stayed intact. Her house stayed hers. She cried when I told her she was covered. Actually cried. I've been doing this for fifteen years, and I still get emotional when a policy works the way it's supposed to.
Most people don't understand umbrella policies. They think they're for rich people. For people with boats and vacation homes and servants. They're not. They're for anyone who has assets to protect. If you own a house, a car, a retirement account — if you have anything worth suing for — you need an umbrella policy. Because lawsuits don't care about your income level. They care about what you own.
I've seen $30,000 lawsuits against people who make $40,000 a year. I've seen $100,000 judgments against teachers, nurses, retail managers. The legal system doesn't check your tax bracket before it awards damages. And once a judgment exceeds your auto or home liability limits, they come for your savings, your investments, even your future wages in some states.
Umbrella policies are cheap. $1 million of coverage typically costs $200-$400 a year. That's less than most people spend on streaming services. And it covers you above and beyond your auto and home liability limits. Car accident, slip-and-fall at your house, defamation lawsuit, even some dog bite incidents — the umbrella covers it.
My client's lawsuit settled for $125,000. Her auto insurance paid $100,000. Her umbrella paid $25,000 plus $8,000 in legal fees. She kept her retirement. She kept her house. She kept her peace of mind. And she pays $280 a year for that protection. I don't know many better deals than that.
If you don't have an umbrella policy, call your agent. Ask for a quote. It takes ten minutes. It might save your financial life. Because $50,000 lawsuits happen to regular people every single day. And the only thing worse than being sued is being sued and uncovered.
— Marcus Tiernan
