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When Your Initial Liability Policy Runs Out, an Umbrella Policy Has Your Back

When the unthinkable happens, it’s comforting to know that you have insurance policies in place that can cover the costs or damages that you’re going to have to face. But what happens when those costs exceed the amount of coverage your policy provides? An umbrella insurance policy can make sure that the comfort you felt doesn’t turn into dread.

You may have heard of umbrella insurance, but aren’t exactly sure what it is. Unfortunately, umbrella insurance is widely misunderstood, even though it’s an incredibly important policy for individuals to have.

Finding the best umbrella insurance policy can be difficult if you’re not completely certain how the policy can help you. Umbrella insurance is a personal insurance policy that can pick up where the coverage of your original liability policy, like auto or homeowners, leaves off. What makes this so important? If you reach the point that you could take advantage of an umbrella policy, the difference between having one or not can be the difference between whether or not you’re able to stay on your feet financially.

Consider this; if you’re in a serious auto accident and cause severe injuries to others, their hospital bills are only going to be more significant the longer they stay. Let’s say your auto insurance policy only provides coverage up to $500,000. It’s easy to imagine a hospital bill surpassing this amount — and exceeding it. Without an umbrella insurance policy, you’re going to be footing what’s left of the bill.

When you’re facing a high price tag for an accident or injury you caused, an umbrella policy is going to help you financially. It could even protect you from losing everything. Along with homeowners and auto claims, umbrella policies can help you with the following:

  • False arrest
  • Libel
  • Slander
  • Invasion of privacy

Typically, umbrella insurance policies are sold in increments of $1 million, and they’re designed to provide coverage that goes above and beyond your existing policy. How do you know how to find the best umbrella policy for you and your family’s needs? Talking to your insurance agent to determine where your coverage ends and where your umbrella policy should begin. Plus, the average premium is under $200 per year — meaning your policy could only be $16 a month. When you think about it regarding, this policy is one of the best deals you’ll find for insurance and protection you really can’t afford not to have.

Here’s How the Best Umbrella Insurance Can Help You and Your Family Stay Protected

But wait, you might be thinking, I don’t need that much in coverage! That could be the case, (although it’s good to keep in mind if things change down the line), but umbrella policies can also assist with several other situations as well. On top of protecting your assets, umbrella policies can also help you survive a lawsuit.

While it might not seem within the realm of possibility now, crazy lawsuits do happen… every day. If your dog bites someone, if you’re at fault in an accident, umbrella policies can protect you. Lawsuits are notoriously expensive. In the event of being involved with an injury, property damage, libel, slander or wrongful death, your policy can help you manage the high legal fees that you’ll likely encounter. Here are a few examples where these policies can be used:

  • In the event of home or auto accidents
  • Accidents involving pets or children
  • Accidents involving boating or recreational vehicles, such as ATVs
  • Sports, non-profits, or vacation activities
  • Rental houses or investment properties
  • Social media activities

If you consider the contrary, when you’re dealing with such high costs and fees, you have a lot to lose. Everything you own could be at stake if you’re not able to cover the costs. Your home, your retirement funds, all your savings, investments, and future wages are all at stake when you don’t have the proper coverage to manage severe situations.

Here’s the part where people tend to get confused. Earlier we mentioned that umbrella policies are designed in increments of $1 million. This doesn’t mean that you or your family need to have $1 million in assets to match it. Your liability coverage isn’t designed to match the amount of assets you possess like a renters insurance policy, for example.

Instead, these policies are designed to cover the amount of money you could be looking at in bills if you’re sued, dealing with property you damaged, or having to cover these costs for someone else. You don’t have to have $1 million to be sued for $1 million.

Liability insurance is made to protect you from the damages you cause, or a judge and jury believe you cause. Without it, you could find yourself in an incredibly difficult situation; and less than $20 a month could have prevented it.

If you already have liability coverage for homeowners and auto, you’re on the right track. Now take it one step further and make sure you have the full coverage that you and your family deserve with a proper umbrella insurance policy.