UNDERSTANDING UMBRELLA INSURANCE
You don’t have to be a millionaire to be sued like one. An umbrella policy is an important part of your insurance coverage.
WHAT IS UMBRELLA INSURANCE?
Umbrella insurance – or personal liability insurance – is an optional type of insurance that does just what it sounds like… Acts like an umbrella over your auto and homeowners liability policies.
If you’re sued for damages that exceed the liability limits of your home, car or boat insurance, your umbrella insurance will kick in to pay the remainder of what you’re liable for.
YOU DON'T HAVE TO BE A MILLIONAIRE TO BE SUED LIKE ONE...
Imagine losing your retirement funds, investments, savings and even perhaps your future earnings. Money you don’t even have yet can be factored into a settlement.
That’s pretty much an insurance worst-case scenario, but it happens all the time to people who do not have Umbrella insurance protection.
WHO NEEDS AN UMBRELLA POLICY?
It’s worth considering umbrella insurance if you:
Have children and/or pets
Have significant savings or other assets
Have items on your property that can lead to injury lawsuits – pools, trampolines, guns or dogs
Have a boat or other recreational vehicles
Have an inexperienced driver in your household
Frequently host parties in your home
Own a rental property
Volunteer or serve on the board of a nonprofit
Participate in activities where you could easily injure others (ex. hunting, skiing or surfing)
If you checked the box on any of the above, you should have an umbrella policy in place.
HOW MUCH UMBRELLA INSURANCE DO YOU NEED?
Umbrella insurance is sold in million-dollar increments, starting at a $1 million limit and can increase up to $10 million or more.
For the average homeowner, a $1 million umbrella insurance policy is usually adaquate and costs $150 to $300 per year.
3 REAL LIFE CLAIMS THAT WILL CONVINCE YOU THAT YOU NEED UMBRELLA INSURANCE
In New Jersey a $1.2 million settlement was reached when an underinsured driver hit a policeman who was completing paperwork at a traffic stop. The driver had to pay legal fees for his defense as well as the settlement.
A family was hosting a dinner party and gave a few friends a tour of their home before dinner. During the tour, one of the guests tripped and fell down some stairs located in an unexpected area, receiving severe injuries. The guest sued the hosts for $500,000, which was $200,000 more than what their homeowners’ policy will cover.
A teen driver stopped at a stop sign to wait for a friend to catch up. The driver put the car into reverse to back up to meet the friend, when the car ran into a jogger. The jogger received a massive head injury, and the total claim was $1,000,000 over the parent’s primary insurance policy.