Do you ever wonder if you have enough insurance to cover a large insurance claim filed against you? And do you know where the money would come from if you weren’t adequately insured? The answers to these questions come from insurance agents who recommend that clients get umbrella policies, which provide extra coverage when policyholders reach the limit on the liability coverage in their home or auto policies.
Consider the risk involved in the following scenarios:
- Your teenage son is in a car accident and you are sued for $1 million.
- A neighbor is injured or drowns in your swimming pool.
- A passerby trips and falls on the sidewalk at your house.
- Your dog bites a friend’s child.
What’s My Exposure?
Today, anyone can be sued, and million-dollar judgments are becoming more common. Alarmingly, any amount that exceeds your standard liability policy would fall to you. To cover these costs, you could be forced to use money from your current assets, such as savings accounts, 401(k)s, or even your home. Additionally, your future earnings might also be impacted. While these types of catastrophic events are unlikely, insurance companies offer umbrella coverage for customers who want to protect their assets and feel more secure. The good news is, this insurance is relatively affordable. Personal umbrella policy limits typically start at $1 million and can go as high as $10 million or more, depending on your needs.
How the Coverage Works
If there is a covered liability claim under your auto or homeowners policy and the dollar amount of the judgment exceeds the coverage limits you have purchased on those policies, the umbrella coverage goes into effect. Minimum coverage limits must be met on your auto and home policies before you can purchase an umbrella policy. The big question is often “How much coverage should I carry?” The answer usually depends on your net worth. Calculating the total value of your assets, including your home, stocks, mutual funds, and retirement accounts, is an essential first step.
Contact your Leavitt Group insurance agent for more information on umbrella insurance and for a review of your coverage options.
