Umbrella insurance policies provide additional insurance that takes over when a claim uses up all of the homeowners or auto insurance. They can even cover some losses that home and auto insurance do not cover. Personal umbrella policy limits typically start at $1 million and can go as high as $10 million or more, depending on your needs. Here are four situations where umbrella policies are vital:
1. Auto Insurance
A driver loses control on icy pavement and strikes another car. The other driver suffers serious injuries tallying up to $900,000. The at-fault driver has an auto insurance policy that covers $250,000 for injuries to any one person. If he has an umbrella insurance policy with a $1,000,000 limit, it will pay the remaining $650,000.
2. Homeowners insurance
A homeowner has insurance that covers her liability for bodily injuries to others up to $300,000 per accident. A neighbor child drowns in her swimming pool. The neighbor’s estate sues her for $1,500,000. Her homeowner’s insurance will pay $300,000; but if she doesn’t have an umbrella, she is responsible for the remaining $1,200,000.
3. Boats
A man has a boat insurance policy that covers his liability for injuries to others up to $300,000. He loans his boat to a friend for the weekend. His friend is wreckless and plows into another boat. The survivors and the estates of the deceased sue the driver and the boat owner. The court finds the owner liable for $1,000,000 of the judgment. His boat policy pays $300,000 but he is responsible for $700,000 because he didn’t have an umbrella policy.
4. Personal injury
A homeowner is involved in a heated argument with a contractor and falsely accuses them of theft in front of other neighbors. The contractor sues for defamation and wins $500,000. The homeowner’s insurance does not cover defamation, but her $1,000,000 umbrella insurance does. After she pays a $250 deductible, her umbrella pays the rest.
These are just a few examples of how an umbrella insurance policy can help protect your personal assets from risk. Contact your Leavitt Group insurance advisor to learn more about this important coverage.
