Why Do You Need Umbrella Insurance?
Do You Need An Umbrella Insurance Policy?
In today's "who can I sue" world, having an umbrella policy is more important than ever. An uninvited visitor comes to your home to ask who painted your house. She trips over a step at the front door (yes, this actually happened to me). Your eighteen year old daughter on her way to school changes lanes too quickly; the result a multi-car accident. A guest at your home falls down a flight of stairs and is badly injured. You can be held liable to others for the injuries incurred, damage to property that was caused, their lost wages, emotional distress and more.
Even with what you believe to be high limit auto insurance and homeowners insurance in place, it may not be enough. Even if you believe you are not at fault, a lawsuit can be filed against you and you may lose. It is great that you have $500,000 of liability insurance. You're "fully" covered* then, right? Not so fast. The judge rules against you and you're judged to be liable for $1,250,000. After your home insurance policy pays out $500,000, your on responsible for the remaining $750,000. If the event is covered by your umbrella policy, the addition three quarters of a million dollars will be paid by your policy. If you did not have an umbrella policy, the liability would need to be paid through your savings, investments, future assets or even potentially your future wages.
The truth is, in a blink of an eye, your entire savings can be put in jeopardy. An umbrella policy can help protect you and your family from the hardship described above.
Limits typically offered are $1,000,000 to $5,000,000 of liability coverage. Umbrella policies in excess of $10,000,000 do exists.
Policies are relatively inexpensive compared to other insurance policy types. A $1,000,000 umbrella policy typically cost about $250 a year.
Coverage for claims include claims like slander, defamation of character and libel.
Helps cover the costs for attorneys fees and other costs due to lawsuits the umbrella policy may cover.
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*Full coverage in insurance is a term used all too often and in most all cases not true. Stay tuned for our next posts discussing being "fully" covered.