Liability insurance is an important part of asset protection, as it helps shield you from financially damaging liabilities you may incur for a victim’s accidental injuries, property damages, and other losses. Chances are your home and auto insurance make up the foundational components of your liability protection, giving you a wide range of coverage against many of the risks you face on a daily basis. Unfortunately, the two policies together still do not cover everything, and even high coverage limits may still fall short of covering your entire liability.
So what do you do if you have an income or assets to protect against potential litigation? Continue reading to learn how umbrella insurance can help fill in gaps and give you the security you need for a strong financial future.
Understanding Umbrella Coverage
If home, auto, and boat insurance are safety nets beneath your assets, umbrella insurance is a much wider safety net beneath all of them. Its coverage is highly versatile and can be used to cover many different types of liability, whether your teen driver hits a pedestrian, or a handyman is injured while working in your home. First, your auto or homeowners liability will pay up to the limits of your policy, and then your umbrella insurance will pick up where your primary coverage left off. Because of this, your carrier may require that you maintain a minimum amount of homeowners and auto insurance liability, which is usually:
- $300,000 or $500,000 homeowners liability
- $250,000/$500,000 auto bodily injury liability OR
- $300,000 combined single limit (CSL)
A true umbrella policy – not just excess liability protection – will not only extend the limits of your existing coverage but also provide added protections not available from your home and auto insurance. Often, these include coverage for slander, libel, false arrest, and damages you cause when traveling abroad.
How Much Additional Liability Protection Do You Need?
If you drive a car, you are at risk of being sued. If you have guests in your home, you could be sued for their injuries. The fact is hazards are existing all around us. While you cannot control what the future may hold, you can be proactive in protecting yourself against expensive litigation. If you have a lot of assets, earn a high income, or expect to have personal income in the future, umbrella insurance is probably for you.
The amount of umbrella insurance you need depends on your risk factors for being sued and your current and future net worth. Personal Umbrella policies typically start at $1 million but are available in coverage amounts of up to $5 million or more depending on your individual needs. If that sounds like a lot, remember this: It is not uncommon for judgments and legal fees to total hundreds of thousands and even millions of dollars. If your primary liability coverage falls short, umbrella insurance helps prevent a court from pursuing your personal income and assets for reparation of damages.
Fortunately, since umbrella insurance is secondary to home and auto insurance, it tends to be very affordable for the average household. For example, a policyholder who owns a home and two vehicles might expect to pay approximately $200 per year for $1 million in coverage. You can capture even greater savings by working with an independent agent here at Gutman Insurance who can shop around for coverage on your behalf and find discounts for purchasing your umbrella and homeowners insurance from the same carrier. For more information about umbrella insurance or to request your free quotes, contact our office today.
How much would it cost you to rebuild your life after a major lawsuit? Would a million-dollar judgment derail your plans for the future?
