What is Umbrella Insurance and Why is it Important?
Everyone knows that life can be very unpredictable at times. Whether you are at home, work or on the road, something unexpected will eventually happen. It is important that you are protected when it does. But the problem is that most people aren’t aware of just how many risks they face every day. Entertaining, rental properties, pets, traveling and young drivers are all examples of everyday risks.
The average person only carries between $100,000 - $500,000 of liability coverage in their policies. That is a significant amount of money when you think about it. However, when you are talking about an instance that involves a serious injury, those amounts do not go very far in terms of protecting yourself. The medical bills, emotional distress, scarring and lost wages associated with the accident will easily elapse your coverage. This is especially true if multiple people are involved.
What will happen if you hurt someone and you don’t have enough insurance to cover it? It’s a scary thought and unfortunately, it’s a situation that many people find themselves in after a bad accident. All your savings, assets and future income will be at risk if you don’t have the right protection.
To explain it simply, an Umbrella Policy adds an extra $1 million, or more, of coverage that goes beyond the limits of your home, auto, or watercraft insurance policies. It is an additional layer of security for those that are at risk of being sued for damages to other people’s property or injuries caused by an accident.
A scenario:
Say your auto policy has a $500,000 liability coverage limit. One day you accidentally run a red light and hit a minivan filled with people. Car repairs total over $45,000 and the treatment of the injuries in the other car eclipse $500,000. You may be liable for all the expenses that go beyond your current coverage limit. That means they can now go after your assets and any of your future income. But if you had an Umbrella Policy, it would step in and pick up the additional costs that exceed your coverage limits. Thus, giving you peace of mind and protecting your assets.
Many think that Umbrella coverage is for high income people with lots of assets. But It’s for everyone, especially if you:
Rent out properties
Have pets
Own outdoor toys. Such as ATVs, boats, snowmobiles, dirt bikes, etc.
Host parties
Own a home
Participate in high injury risk sports. Such as surfing, hunting, skiing, snowboarding etc.
Post reviews of products and businesses
Have assets and savings to protect
Own weapons
Have a newly licensed driver in the house
Travel outside the U.S
It costs less than you think
An Umbrella Policy is something that you hope you never have to use but it’s a lifesaver when you do. Without one, your assets, future income and retirement savings could be at risk if you are found responsible for an accident. For only about $10 - $25 per month you can make sure that you are fully protected.