Nobody’s perfect. That’s why you buy liability insurance: You can avoid financial ruin if you accidentally cause major injuries or property damage to others. Problem is, your insurance isn’t perfect, either. That’s where a personal umbrella insurance policy comes in.
Think of umbrella insurance — sometimes called excess liability insurance — as a fail-safe for your savings and other assets. If you’re sued for damages that exceed the liability limits of your car insurance, homeowners insurance or some other coverage types, an umbrella policy helps pay what you owe. In some cases it provides coverage that’s not included in the base insurance policies.
Some people may think it is not necessary because they feel like they have a slim chance of ever making a claim. However, if you get in a situation where someone sues you, and you don’t have umbrella insurance you can be in big trouble. No matter how rich you are, you have the ability to lose large amounts of money and assets.
For example, you can get $1 million in coverage for around $200 a year. In the case that you would injure someone and be held liable, this would be completely worth it. If you didn’t carry this coverage then the defense attorney could go after all of your assets including future wages.
It is easier for both sides if you carry this coverage because the injured person would prefer to collect from your insurance than to go after your future assets, and you would prefer to have insurance cover it over losing your bank account, home and other assets. It’s still up to you as the policy owner to decide if umbrella insurance is worth it, but after looking at the risks, it seems as though it is.
So, what does an umbrella insurance policy cover?
Attorney fees and legal costs
Umbrella policies essentially increase the limits of bodily injury and property damage liability coverage on your auto and home insurance policies. What’s more, the limits are typically from $1 million to $10 million. That means you and your family can rest at ease should the damages of a major car accident exceed the limits of your car insurance, for example.
Our Insurance Problem Solvers can go over this policy in detail with you to ensure you understand what it covers and what it doesn’t. It’s our goal to ensure you’re properly protected.
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