Don’t Forget the Umbrella

Getting caught in the rain without an umbrella may cost you a new outfit, but getting caught in the aftermath of an incident without an umbrella insurance policy could cost you way more! While an umbrella protects you from the elements, a personal umbrella insurance policy covers claims that exceed your regular insurance policies and protects your personal assets from a catastrophic lawsuit or judgment. In this space, we share details about umbrella insurance coverage and protection, insurance requirements, and who should consider this type of policy.

COVERAGE and PROTECTION

Unfortunately, we live in a litigious society. Incidents and accidents happen. A personal umbrella policy adds protection to give you peace of mind that your assets are not at risk. Coverage is broad and covers catastrophic liability loss exposures arising out of the home, cars, boats, recreational vehicles, sports, and other personal activities. They can also protect people whose personal circumstances make them legitimate targets, such as having a pool or trampoline, owning certain breeds of dogs, or participating in hobbies or sports that could unintentionally cause you to harm others, such as hunting, surfing, skiing, or auto racing.

An umbrella policy also provides coverage of personal liability loss exposures. The policy covers bodily injury and property damage liability, as well as personal injury. Personal injury can include false arrest, malicious prosecution, wrongful eviction, or wrongful imprisonment or detention, and can cover legal defense costs as well as claims against you. Another important feature of these policies is protection in a lawsuit against you for libel, slander or defamation of character, or for decisions you might have made as a volunteer member of a nonprofit board of directors. Coverage often applies anywhere in the world, including accidents while driving in a foreign country, or from renting a boat while on vacation.

INSURANCE REQUIREMENTS

Because an umbrella policy provides protection beyond the usual – affording an additional layer of insurance above your auto insurance and your home insurance liability coverage – most policies require that you have underlying auto or property insurance contracts in place and may have a minimum requirement of coverage. For example, on your auto policy, you may need to carry bodily injury liability coverage of $100,000 to $300,000 as well as property damage liability of $100,000. For a homeowner’s policy, you may need to carry about $300,000 in liability coverage.

WHO NEEDS UMBRELLA COVERAGE?

Anyone who has accumulated personal wealth, such as a home, savings accounts, investment portfolios, real estate and more, can benefit from the coverage of an umbrella policy. Personal umbrella policies are recommended to at least cover your net worth. The policies are usually sold in million dollar increments, ranging from $1M to $10M. You may assume that if you don’t have $1M to lose, you don’t need an umbrella policy. In actuality, your retirement funds, investments, savings and even your future earnings could be at risk if a judgment is levied against you through garnishing your wages to pay off a settlement.

In summary, don’t get caught in the rain without an umbrella! The relatively low cost of an umbrella policy is usually worth the protection, peace of mind, and security it offers. Please don’t hesitate to contact us if you would like to discuss an umbrella policy as part of your financial plan.