If you find yourself on the wrong end of a lawsuit, the financial damage can be enormous. You rely on your home and auto insurance to protect you against any liabilities you incur, but would they be enough to pay for hundreds of thousands or even millions of dollars in damages?
Umbrella insurance is designed to protect your income and assets against liquidation and seizure in the event your primary insurance comes up short of your total liability. Without it, you could risk losing much of your net worth and faced with years of wage garnishments.
What Umbrella Insurance Covers
Umbrella insurance is purchased in high coverage limits, usually ranging between $1 million and $5 million. It effectively builds upon the liability coverage you already have through your home, auto, boat, and other insurance policies. The coverage is supplemental, meaning it serves as a secondary payer to claims first filed against your primary coverage.
It is important to note that umbrella insurance is different from ‘excess liability,’ which merely extends your coverage limits. Instead, a true umbrella policy also fills in coverage gaps by providing additional protection for things like libel, slander and false arrest, which are not typically included in a home or auto policy.
Additional Umbrella Benefits
The primary purpose of an umbrella policy is to extend the third-party liability limits of your underlying policies such as your car insurance or homeowners insurance.
In addition to third-party limits, an umbrella policy can also be endorsed to extend the uninsured motorist (UM) and underinsured motorist (UIM) limits as well.
What this means is that if you or your passengers were injured or killed by a third-party, that didn’t have sufficient coverage, the umbrella would extend your UM and UIM coverage up to the limits of your umbrella.
As important as this coverage is, it is often overlooked and not even offered by many insurance agents. At Imes and Associates, we believe that having this benefit is so important that we recommend it to all our clients.
Your Risk of Being Sued
While it may seem unlikely, your odds of being sued might be higher than you think. There are many different hazards you face on a daily basis, some of which may be hidden around your home or even in your commute. For example, insurance industry estimates assume the average person will file a claim for a car accident about once every 17 years. If you happen to be responsible for causing the accident, you could be sued for the damages.
Property damage and bodily injury are probably covered under your auto insurance, but the limits could prove too low for a very serious accident involving multiple vehicles and victims. Even if you carry $500,000 for total bodily injury protection, it can still come up short of covering your liability in a million-dollar lawsuit. If you had umbrella insurance, your supplemental liability coverage would pick up where your auto insurance leaves off, paying for the remainder of damages up to the limits of your policy.
There are many different things you could be sued for, from injuries occurring on your property to accidents you or someone in your household cause away from home. Everyone is at risk of a lawsuit, which means no one should be without adequate personal liability protection. Keep in mind that some things may further increase your risk of a lawsuit, such as:
- Having a licensed teenage driver in your home
- Frequently driving long distances
- Installing or purchasing a home with a swimming pool
- Having a dog; taking your dog around other pets or humans
- Hosting showers, gatherings, or parties in your home
- Allowing overnight guests in your home
- Renting out investment property to a tenant
Request an Umbrella Insurance Quote
If you do not have umbrella insurance, adding this important coverage to your insurance portfolio is as simple as contacting an independent agent here at Imes Insurance Associates. Our team understands risk management and asset protection, and we can help you find personalized liability coverage that fits your unique needs. Most umbrella carriers also require that you carry a minimum amount of primary liability protection before issuing coverage. Those limits are usually:
- $300,000 or $500,000 homeowners liability
- $250,000/$500,000 auto bodily injury liability OR
- $300,000 combined single limit (CSL)
If your current home and auto coverage does not meet your insurer’s limit requirements, we can assist you with that, too. Ultimately, we want to be your partner in protecting your wealth and your family’s future. Call us today to request your quotes and find out how an umbrella policy can help protect everything you have worked so hard to achieve.
What could you lose in a major lawsuit?