Getting umbrella insurance may turn out to be one of the best investments you’ll ever make, given we live in a “lawsuit-plagued” climate these days.
Someone could sue you for damages much beyond the limits provided on your primary auto, home, or business insurance policies. This could happen if you are involved in an accident of any kind, or if someone is harmed on your property, for instance.
When you are required to pay more than your primary policy limits, an umbrella policy provides additional liability protection.
This can help you cover additional costs for a wide array of unexpected demands.
For example, excessive legal defense costs and claimant’s wages, and rehabilitation costs are some instances when this insurance can provide coverage.
So, let’s delve a little deeper into how umbrella insurance works:
How Does an Umbrella Policy Work?
We’ll put it simply. When your current insurance policy is exhausted, umbrella insurance has your back. It’s becoming a more desirable insurance to have these days because of the growth of a suing culture cast over America.
Some examples of real-life scenarios where people have benefited from having an umbrella policy include:
- Their dog bolts from the house and savagely attacks a passing neighbor out for a stroll. Their neighbor files a lawsuit against them for medical expenses, lost pay, and pain and suffering.
- In a brawl at school, a daughter hits another girl, breaking her arm. The girl’s parents then file a lawsuit against her parents.
- A guy causes a giant collision, and his auto insurance and property damage coverage are insufficient to replace the automobiles of all the accident victims. His liability coverage is also inadequate to cover their medical expenses.
- For a field trip lunch, a mother sends some cookies to her son’s school. Several pupils get sick, and their parents file a lawsuit against you. And probably the most common:
- You are in an auto accident where damage and medical expenses quickly add up to $600,000 worth of coverage. Your auto limits cap at $100,000 and you are left with the responsibility of a $500,000 bill.
These scenarios might sound farfetched (and trust us there are so many more that we could add to this list) but in reality, randomly unexpected incidences do occur, and if you’re not correctly covered, you can pay a hefty price. These are all examples that we have heard and assisted customers with over the years.
A Strong Policy has You Covered on All Bases
The best part of umbrella insurance is it protects not only the policyholder, but family and household members as well. It can also covers other parties involved in a given incident.
So, if your teen is a worrisome driver, you can at least know that umbrella insurance will cover the medical expenses of injured parties, in the case your teen is found to be liable in a significant accident.
Umbrella insurance provides extended coverage to your auto and homeowners insurance. Yet, the incident does not have to occur in your vehicle or on your property to be covered. Confirm your specific policy verbiage to find out how far your coverage extends.
You must understand how your policy defines a household member to ensure you receive the coverage you require, though.
Do You Really Need Umbrella Insurance?
The decision to purchase umbrella insurance is undoubtedly fraught with anxiety.
Many insurance companies argue that you need it, since we live in a litigious society where anyone may sue you for anything and financially ruin you.
Personal responsibility horror stories abound in the headlines, with juries awarding multimillion-dollar judgments to victims that individuals were forced to pay. However, how likely are you to find yourself in a position like this? Is umbrella insurance necessary?
Well, if the total worth of your assets exceeds the limits of your auto or homeowner’s liability, you should consider purchasing umbrella insurance.
Your assets can include:
- Standard saving’s and checking’s accounts
- Retirement and college savings
- Investment accounts
- Home equity
The premise behind this advice is that you should have adequate liability insurance to cover all of your assets. This is so that you don’t lose them in the event of a lawsuit. So, when you think about umbrella insurance with this logic, it makes sense.
How Much Does it Cost?
The cost of an umbrella liability policy is determined by:
- The amount of coverage you acquire
- The state in which you live as state insurance rates vary
- The risk you pose to the insurance provider
- The more residences or cars you possess
- The number of household members covered by your insurance.
When you take all these factors into account, umbrella insurance policy prices can vary widely. Yet, in general, you can consider it as pretty cheap insurance to take out.
You might end up paying, for example, in the region of 300 bucks a year for million-dollar insurance coverage.
Why is it so cheap?
Mainly because an insurance company won’t provide you with an umbrella policy unless you have a lot of homeowner’s and motor insurance. Also, before you can buy an umbrella policy, most insurers require you to have the maximum liability coverage offered under your homeowner’s and auto policies.
Invest in Umbrella Insurance
The key takeaway to umbrella insurance is there is a good risk of being sued in today’s society. If you value your assets and family and household members, it’s absolutely worth the investment to protect everything that you’ve worked so hard to earn. Additionally, it guarantees a sense of security and is an added layer of protection for yourself and the people you love.
If you’re interested in getting yourself umbrella insurance, please contact us today for sound and honest advice.
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
