Umbrella Insurance
What is it?
Who needs it?
Do I need it?
Lets break it down…
An Umbrella policy is always going to be in addition to your underlying policies. This could be your homeowners, auto, boat, ATV, rental properties, anything that’s in your name.
Think of the umbrella as an add on. If you have $500,000 of liability in your home and you have an umbrella for a million dollars, you now have $1.5 million of liability. Most homeowners policies will only write up to $500,000 so if your net worth exceeds this, you may need an umbrella policy to protect yourself from any liability claims that may exceed $500,000. Otherwise your assetts will only be protected up to the amount on your existing policy, and a significant claim could result in you losing everything you have worked so hard for.
This Secondary layer of liability protection is very cost effective and can protect you greatly in the long run.
It is difficult to figure out how much liability you need, and really comes down to how much coverage you are comfortable with. Some people like a million dollars, some like five million, some won’t sleep at night unless they have ten million. It does not matter because again, it’s very hard to predict if you ever got sued, how much of a legal expense you would have to either settle that lawsuit or to fight that lawsuit.
An umbrella is a very important part of your insurance portfolio. If you have children driving, if you have a pool, if you have rental properties etc. If you have any risk that starts to increase your liability, you need to get an umbrella. We believe everyone who buys a home should have an umbrella, its better to be covered and not need it than to need it and not be covered. Accidents happen, and all you can do is protect yourself and your assets the best you can.
What exactly would an umbrella policy cover?
- Bodily Injury Liability – It’s easy to get distracted while driving. All it takes is an incoming text message, a fussy baby, or changing the radio station and your eyes are off the road long enough to crash into a pedestrian, bicycle, or another vehicle. As an owner/operator of the vehicle, you may be held financially responsible for any bodily injuries caused as a result of the accident. An umbrella or excess liability policy helps extend your coverage to better protect you against these significant costs. It’s the ideal coverage to provide peace of mind, even when the unthinkable happens.
- Watercraft Liability – Accidents can happen to anyone at any time, even those who have been out on the water for years. Personal watercraft insurance is a necessity, but sometimes the limit these policies provide isn’t enough. Your standard watercraft policy limit could easily be exhausted if you are found to be at fault for property damage or personal injury. An umbrella or excess liability policy can extend those limits, providing you an additional layer of financial protection.
- Lawsuits – You invite guests over for a pool party and one of your guests dives into the shallow end of the pool and is permanently injured. They hire a lawyer to represent them and after a long legal battle, you and your family are left financially responsible for their injuries. Do you have enough money in savings to cover your legal responsibilities as well as the legal defense costs? An umbrella or excess liability policy increases your personal liability limits by adding protection over and above your current auto, boat, or homeowners policies – providing real financial value, as well as priceless peace of mind. Excess liability insurance is available either by an endorsement to your homeowners policy or available as separate coverage.
Of course these examples are worst case examples. But unfortunately, accidents happen. It is better to be covered and never need it than something happen and you not have the coverage to protect yourself.
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