An umbrella insurance policy does one thing best: protect you from lawsuits. When you are personally liable for bodily injury of another or damage to someone else’s property, your homeowners, auto or landlord’s insurance kicks in if you are sued.
But if the judge or jury awards the victim more than the amount of your policies, your personal assets could be at risk. An umbrella insurance policy protects you from financial disaster.
It’s frightening to think about getting sued. In today’s world, you know lawsuits are all too common, and you don’t want to be on the receiving end. You do everything you can to make sure your home is safe and you drive carefully, but even the most cautious person can’t always guard against accidents.
If you have an umbrella insurance policy, you are protected over and beyond the extent of your other policy coverage limits, and your personal assets like your home and retirement accounts are safe.
Here’s an example of an umbrella insurance policy at work. You get into a car accident and you’re found at fault. The other motorist is injured and sues you for lost wages. Your auto insurance policy will pay out $300,000 — the maximum limits of your policy — but they’re suing you for $500,000. They’re a doctor and they are losing work because of their injury, and their loss of wages is high.
If you don’t have an umbrella insurance policy, how will you pay the additional $200,000 if they are successful in their suit? If you have umbrella coverage, you’re taken care of. If not, your personal assets are at risk.
There are endless scenarios you can probably think of where you may get sued. Whether your teenager crashes the car into a neighbor’s garage, your daughter punches another kid in the nose, your dog bites a neighbor or a guest slips on your icy steps, there are plenty of “what-ifs” that confirm purchasing umbrella coverage is a solid decision.
However, there are some cases where it’s not only a good idea — it’s more of a strong recommendation. If you are a public figure or if you have a high net worth, you could be at a higher risk of getting sued. If you throw lots of parties or if you own a dog or a swimming pool, you should also strongly consider it.
It’s important to note that your coverage does not extend to your own personal property. If you have a loss that exceeds your other policy coverages but does not affect another person, you have to pay for this out of pocket. Also, a personal umbrella policy won’t cover any business losses — you need a business umbrella policy for that.
Ready to learn more? If you like the idea of protecting your assets and gaining that peace of mind, talk to our team at Four Seasons Insurance. We’re in the business of helping you prepare for the unexpected, and an umbrella insurance policy is one of the best ways to do so.