Personal Umbrella Insurance Policy: Why do I need it?

When agents approach their clients with the topic of personal umbrella insurance they often hear, “Why do I need it?” Personal umbrella policies are one of the most overlooked and economical ways to protect your current and future assets. Let’s explore why you need it and how it will protect you.

Why

Umbrella policies protect you in lawsuit situations where large judgments are awarded. In a lawsuit judgment, your home, auto, investments, checking and savings accounts as well as retirement savings and future income, are considered assets to which the judgment can be attached. Many times courts will garnish up to 25% of your current and future earning to settle a suit. The top risks for these losses are auto accidents, dog bites, rental property, pools, trampolines, slip and falls on your premises and serving on the board of a company or a non-profit organization. In 2013, 78% of umbrella claims were from auto accident lawsuits.

Another area that a personal umbrella gives you coverage, that is generally not afforded you under a homeowner’s policy, is for claims of false arrest, invasion of privacy, libel and slander. A growing number of claims in this area come from the improper use of Social Media.

Most people today will find one of the above mentioned risks present in their daily lives.

How

An Umbrella policy extends liability coverage once your home, auto, boat or rental dwelling policy is exhausted. It also is purchased in $1 million coverage increments. It will also cover

several areas not covered by your other insurance policies as well as the defense costs for those situations. It is not uncommon in today’s world for lawyers to charge between $200 and $500 an hour. This alone can cause the average personal financial hardship.

Here is an example of an auto lawsuit where the person needed an umbrella and didn’t have one. A mother driving down the road quickly reached into the back floorboard to retrieve her little girl’s Sippy cup. In that brief moment, she crossed the center line and hit another car head on. The drive of the other car was killed and one of the passengers seriously injured. The lawsuit that followed ended with a judgment of $1.25 million. The mother had an auto liability limit of $300,000. The rest of the judgment would be paid with personal family assets and garnished wages over most of the rest of her life.

Conclusion

Even the most careful and responsible people, can find themselves in a situation that could cause a lawsuit of this kind. While most people will unlikely have to face something like this in their lifetime, it’s still wise to consider protecting against such a devastating financial disaster.

Call one of our advisors today and find out how economical the protection can be for you.