You wouldn’t be caught in a downpour without an umbrella, so why go through life without the protection you need to weather life’s storms? Umbrella insurance is extra liability protection where — and when — you need it most. Long after the limits on your standard liability limits have been surpassed, umbrella insurance can keep paying legal fees, claims and judgments against you up to $1 million or more. Since more than 1 in 8 liability cases end with awards of $1 million or more, it pays to invest in added protection. Best of all, a typical policy costs about a dollar per day — a small price for peace of mind.
Understanding Umbrella Insurance
To better understand how umbrella insurance works, consider the following scenario:
You are driving down Interstate 35 and suddenly blow a tire. Traveling at a high rate of speed, you skid out of control, crashing into two vehicles and slamming into a guard rail. You come away with a few broken bones, but the other drivers and their passengers are not so lucky. Everyone is hospitalized with severe injuries, and a few need surgery. One person is left with a disability that will prevent her working for many months. You are sued for a total of $1.5 million dollars to cover medical bills, lost wages, and pain and suffering. The lawsuit also includes payment for guardrail repairs and reimbursement to victims for the loss of their vehicles. Unfortunately, the maximum liability protection your auto insurance provides is $300,000 for bodily injury, and $50,000 for property damage liability. Without umbrella insurance, you are on the hook for more than $1.1 million — a sum you would be required to pay out of your own pocket.
Of course, this scenario may seem unlikely; but there are many instances when umbrella insurance could come in handy. If your name were listed at the top of a lawsuit, would you have the capital to cover the damages? If not, your victims could achieve access to your savings and investment accounts, as well as any other valuable assets that could be liquidated to satisfy the claims against you. Keep in mind that umbrella insurance is not just for the wealthy. Even without substantial assets, you might not be out of the woods. Victims may request the garnishment of your future wages, which could leave you paying your liability damages for years to come. This limits your personal income and diminishes your ability to save and build wealth. You work hard for your money. Don’t spend years toiling for the income you cannot keep.
What is Covered by Umbrella Insurance?
A personal umbrella insurance policy is added coverage for everything you already have insurance for, plus more. Umbrella insurance coverage can kick in where the limits on primary insurance leave off. This includes claims against your homeowners, condo, renters, auto, motorcycle, boat, RV, ATV, and snowmobile insurance. In addition, umbrella insurance can protect you against claims not covered by other types of insurance. This could include another person’s claims of privacy intrusion, slander, libel, defamation of character, and more. It can even provide a liability safety net when you are traveling abroad.
For more information about umbrella insurance or to find out how this important, but often overlooked, coverage could benefit you, contact our office. Based on your risk analysis, income, and wealth, we can help you determine how much umbrella protection could be right for you.