Lawsuits are everywhere. If you are liable for an accident, injury, or loss, you could be sued for lost wages, medical bills, rehabilitative costs, property damages, and more. With judgments that often total $1 million or more, how would you cover the damages that your home or auto insurance falls short of? An umbrella policy is high-limit secondary insurance that can help pay damages when your primary liability coverage is exhausted. Continue reading to find out more and learn why purchasing this type of insurance could be an important step toward a more secure financial future.
Who Needs Umbrella Insurance?
There are three categories of people who need umbrella insurance:
- Those with established assets that need protection
- Those who expect to receive an inheritance
- Those with the ability to earn income in the future
The last category might be surprising since it assures that nearly everyone needs umbrella insurance. Not understanding the extent of your liability in an accident – even if you do not have any major asset accumulation – could be a mistake that costs you everything. That is because a court can award a victim with the judgment that obligates you to pay for damages from your future earnings. In other words, a student still in college studying for a degree could still be liable for the amount of a $1 million auto accident injury lawsuit that exceeds the limits on your insurance.
Keep in mind that you can be sued for nearly anything that results in a victim’s injury, accidental death, disability, property damage, or some other perceived loss. It could be an accident you cause as a direct result of your personal negligence, or it could be something outside your direct control, such as the defamatory comments your teenager posted about a peer on social media. Whatever the case, umbrella insurance is designed to shield you against out-of-pocket damages.
Some people are at higher risk of a lawsuit than others. These include people who drive long commutes, those with teen drivers in their homes, and people who own swimming pools or regularly host houseguests. However, simply getting behind the wheel of a vehicle – even for a short drive – puts you at risk of incurring a liability. Umbrella insurance can give you peace of mind knowing you have an extra layer of protection against the unexpected.
Purchasing an Umbrella Policy
Fortunately, umbrella insurance is easy to acquire and also very affordable. The first step in getting coverage is talking to an independent agent here at Carrigan Insurance. We can work to assess your current assets and expected future income to determine how much additional liability protection you might need. Umbrella coverage typically starts at $1 million, with additional coverage available in million-dollar increments up to $5 million.
Next, we will shop around to find a competitive rate for the coverage you need. Often, a $1 million umbrella policy is available for as little as $200 per year. We can also identify additional discounts that may be available if you purchase your umbrella and homeowners insurance from the same insurer. Since many carriers require you to also carry a minimum amount of coverage on your primary liability coverage, we can also help you bring those policy limits up to standards of your carrier. These limits can vary between umbrella insurance issuers, but are typically:
- $300,000 or $500,000 homeowners liability
- $250,000/$500,000 auto bodily injury liability OR
- $300,000 combined single limit (CSL)
Finally, our team will be there for you long after you purchase your coverage, and will be available to assist with any questions you may have. We can also explain any additional coverage types in your umbrella policy that may not be covered in your home or auto insurance, such as slander, libel, false arrest, and damages you cause while traveling outside the U.S.
How would you pay for damages in a major lawsuit? How would it affect your plans for the future?