Do I Really Need an Umbrella Insurance Policy?

Last summer, your themed pool party was the highlight of the neighborhood, at least until the guy from two doors down fell off the deck and landed hard. Everyone agrees that it was his own fault. He obviously had one too many drinks, and once you made sure he was fine, the rest of the party was back in full swing.

You’re thinking of making it an annual event until you receive a notice that your neighbor is suing you. Will he win and how much will it be? Is your insurance going to cover the amount?

If you face a situation like this one or something similar, and you lose the lawsuit, the settlement could be close to $2 million. For most people, their insurance doesn’t cover an amount that large. Do you know what to do?

What is an Umbrella Policy?

A personal umbrella policy (PUP) is additional liability coverage over and above your home or auto insurance policy. For your standard insurance policies, and even your add-on policies, you selected liability limits. When you file a claim, your insurance company will only pay up to those limits. If the total amount due is higher than your limit, you’ll be responsible for the difference.

Imagine an auto accident with a serious injury or even a fatality – and you were the one responsible for it. It’s possible that the family will sue for lost wages, emotional distress, medical expenses, and more. Considering most people with decent auto insurance have policies with limits of $100,000 to $300,000, can you afford the costs associated with a huge lawsuit? Most people can’t.

An umbrella insurance policy kicks in after your insurance has been exhausted and pays the difference up to the limits you select for your policy. On average, an additional $1 million in coverage under this policy could run you as little as $200 per year.

What Else Does an Umbrella Policy Cover?

You’ll be covered for more than the hard-to-predict lawsuits that come from injuries in your home or on the road. There are plenty of issues your standard homeowner’s insurance policy isn’t going to cover. Mold, sewage backup, earthquake, hurricanes, and more aren’t included in a standard policy, and even if you add on additional coverage, it may not be enough.

Umbrella insurance also helps when the unexpected happens. Did you go on vacation in another state or even out of country and have an accident? Just being far from home makes it a more expensive claim. Did you say some things you probably shouldn’t have on social media about your neighbor? If you get sued for defamation of character or slander, your umbrella policy can help.

Don’t leave the future of you and your family to chance. Lawsuits can happen for almost any reason these days, and it’s not just what you have in your bank account that’s at risk. Your home, retirement, and investments may be used to pay a settlement.

But there’s a better way.

If you’re ready to discuss umbrella insurance policies or get a quote for a new policy, we can help.