A recent issue of Money Magazine included an article which discussed five things you should know about umbrella insurance. I’m in the process of consolidating our insurance under one carrier and setting up an umbrella insurance policy for my family, and you may want to do the same after reading this article.
Below I’ve listed Money Magazine’s facts about umbrella insurance and my comments on each of them.
Without It, You Could Lose Everything
You neighbor slips on ice in your yard. A branch from one of your trees falls and hits someone. You get into a car accident and the other driver is injured. Any of these circumstances could result in a lawsuit that would wipe you out financially.
Your typical auto or homeowner’s insurance policy will only cover you up to your personal-liability limit which is typically between $100,000 and $300,000, but settlements and legal fees could easily push your liability higher. An umbrella policy will cover these additional costs. Without it you could see your wages garnished and your assets seized.
Liability Risks Are Everywhere
You might think you live an ordinary and boring lifestyle, but there are still risks all around you. Your dog bites the mailman. The neighbor’s kid tries to dive into you pool and misses. The babysitter falls down your stairs. You’re driving down the street and don’t see the teenager on his skateboard until it’s too late. These aren’t everyday occurrences but that’s okay because…
Umbrella Insurance Protects Against Worst-Case Scenarios
While a standard auto or home insurance policy will protect you from typical accidents and damage, umbrella insurance is for those once in a lifetime events that could be catastrophic and life-changing financially. And because it is not likely to be needed often…
Umbrella Insurance is Inexpensive
My insurance company only charges a premium of about $250 a year for a million dollars in excess liability coverage through their umbrella insurance policy. While you may not be crazy about coughing up another $20 a month for something you hope you’ll never need anyway, financially savvy people know that being properly insured is well with the added cost.
You May Need to Juggle Your Coverage
In order to purchase an umbrella insurance policy you usually have to bundle all of your policies with one carrier. That can be a good thing because that should make you eligible for a multiple policy discount which can offset the added cost of the umbrella policy.
Also, you might have to boost the liability coverage under your auto and homeowner’s policies to meet your carrier’s requirements for umbrella insurance. My carrier requires that the underlying policies each of liability coverage of at least $500,000. Check with your carrier for their requirements.
Do you have a personal umbrella insurance policy? Have you ever been in a situation where you needed one?