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Why Do You Need An Umbrella Personal Liability Insurance Policy

Who Needs Umbrella Personal Liability Insurance? Everyone.

Imagine a world where you’re a few short years away from a comfortable retirement. You’ve got an excellent retirement account, a dapper house, and a great car that has all been paid off. All-in-all, your assets amount to a little over a million dollars. Life is good, then one day you get into an accident.

The good news is you’re not seriously injured. The bad news is your car is damaged well beyond what your auto insurance and personal liability insurance covers. Worst yet, the other vehicle involved in the accident is full of high ranking executives from a major company, and the damage to them and their automobile is much more severe.

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The story continues…

The accident goes to court, and the court rules you are responsible for paying the damage of the other car, the executive’s medical bills and their lost wages. In total, your total expenses rack up into the millions of dollars. Your auto insurance covers the first $ 250,000, but the rest of the $750,000 is on you. This mistake could be the end of the world for you, except if you have a stand along umbrella policy insurance.

This type of insurance takes the weight of your costs when policies come up against their coverage limits. In this example, the umbrella policy cost would cover the $750,000 damages and pay your legal bills- saving you from having your entire assets blew away and retirement destroyed by one mistake.

The Inner Workings of An Umbrella Policy

Most insurance companies provide one type of insurance plan. For example, your auto insurance protects you in case of an accident, while your homeowner’s insurance covers you in case something happens to your house including everything inside. A stand-alone umbrella insurance policy is different.

This insurance plan is a single policy that covers most of your financial worries like a metaphoric umbrella protecting you from the rain. So, any time you go over the liability limits of any of your insurance plans, your umbrella policy steps into the absorb the rest of your costs.

Umbrella insurance is a type of personal liability insurance and was created to protect people from lawsuits. The majority of auto insurance plans have a maximum amount of money the insurance company is willing pay out; that coverage is typically 300,000-500,000 per accident. But, sometimes damages can add up to a cost of a million dollars; well above the covered amount by the policy.

Possessing stand-alone umbrella insurance keeps any massive lawsuits from destroying all your assets. Another plus is umbrella policies protect you from lawsuits other plans won’t cover such as accidents occurring on vacation or at work.

What Umbrella Insurance Protects You From

Is umbrella insurance worth it to you? Here’s a quick list of what the policy protects.

Body Injuries

If you hurt someone in an accident and medical bills are more significant than your auto insurance policy covers, an umbrella policy will pay the rest. If the electrician slips and falls on the stairs on your property, an umbrella would cover anything your homeowner’s insurance doesn’t.

You’ve also covered injury types other insurance plans don’t include.

If your dog attacks someone on your walk, homeowners will be of no use to you, but your stand-alone umbrella insurance could pick up the tab.

Damage of Property

If your teenager crashes your car into a fence or the side of your neighbor’s house, your umbrella insurance will pay for anything your homeowner’s insurance won’t cover.

The umbrella also covers things beyond other insurance plans.

If your dog or cat scratches up a neighbor’s siding, fencing or window, your kid breaks a crystal vase, or you rent a boat and crash it into a pier, your umbrella insurance can help take care of these unusual and unexpected damages.

Miscellaneous Legal Damage

If you face a lawsuit for slander or libel; written or spoken words that cause harm to another person or business, your umbrella policy may be able to help with legal damages. It will also protect you against false arrest suits, malicious prosecution, civil charges and violation of privacy.

Fees of The Legal Variety

Last but not least, the umbrella insurance also takes care of your legal fees and court cost as a result of a lawsuit. Lawyers aren’t cheap, and a significant lawsuit could force you to settle when you’re in the right. With a stand-alone umbrella insurance policy backing you up, you know you can afford a great lawyer.

Legal Protection Through Umbrella Insurance

The Limits of Umbrella Insurance

While the personal umbrella policy does cover a lot of rare situations, the insurance does have its limits. Here is a short list of things umbrella insurance does not cover:

  • Malpractice lawsuits
  • Workers compensation claims against employers
  • Damage caused by a business or any business-related activity
  • The intentional damage you cause to any person or property

It’s also important to remember umbrella policies protect you from lawsuits from other people. However, if you are harmed and require a pricey operation, your healthcare provider would have to shoulder the burden. Anything it can’t pay would come out of your wallet. In cases like that, umbrella insurance is not your friend.

Umbrella Policy Cost

The umbrella policy packages usually cost in the millions. The smallest of the insurance plans is a million dollars; next cheapest is 2 million and so on and so forth. That’s a lot, so here are a couple of things that could affect your overall cost.

Your Job

People in some lines of work are more likely to be in accidents that cause harm to others. For example, if your job involves a lot of driving, you have a higher risk of being involved in a car accident.

Your Hobbies

If you have a boat, a motorcycle, or any other kind of specialty vehicle, that increases the number of ways you could get into an accident.

Your Pets

Pets, especially dogs, can be responsible for both injuries and property damage. Having a dog, especially a breed that is considered aggressive, is sure to make your policy costlier.

Your Driving Record

If you’ve been in an accident within the past five years, you’re likely to pay a premium as a result. Also, if any driver in your household is under the age of 25 – even if their driving record is faultless – that increases your risk, and therefore your premium.

Previous Lawsuits

If you’ve ever been in any lawsuit – civil or criminal – that suggests that you are a person who’s at risk for being sued, your policy is likely to be more expensive than someone without a similar history.

Go Get Umbrella Insurance!

Sometimes the worst happens in life, and an expensive accident can take away years of saving and leave your retirement in pieces. Insurance plans for personal liability insurance make sure your hard-earned cash doesn’t go the way of the dinosaurs and protects your money when you need it most.

For more information, check out these articles or contact Save-On Insurance Services for a free evaluation of your Umbrella Policy needs.

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