We’ve all got a rainy day fund – something to get us by when the unexpected occurs. We also have insurance, which helps cover the ‘big’ expenses that might otherwise drain your savings. But what about the really big expenses, like major liabilities? Though rare, they do happen – and often to people who would consider themselves at low risk of a lawsuit. How will you pay for a million-dollar judgment if your auto or homeowners insurance liability coverage is capped at $300,000 or $500,000? For those scenarios, there is umbrella insurance; and it could just save you from a financial disaster.
Understanding Umbrella Insurance
An umbrella policy is extra insurance that expands upon and increases your existing liability protection. It is purchased as a supplement to your auto, home, condo, or renters insurance policy, providing $1 million or more in extra liability coverage that can be used to help pay for legal fees, defense costs, medical bills, judgments, and nearly anything else covered by your primary liability.
To qualify for coverage, most insurers require a minimum of home and auto liability coverage:
- $300,000 or $500,000 homeowner liability
- $250,000/$500,000 auto bodily injury liability OR
- $300,000 combined single limit (CSL)
Should You Consider an Umbrella Policy?
If you think you are not at risk of being sued, think again. Many well-intentioned people have lost everything they own after a single car accident or another event that resulted in a victim’s property damage, accidental injury, disability, or accidental death. Anyone can find themselves in the midst of litigation, but your risk is potentially higher if you:
- Own a swimming pool
- Own a trampoline
- Welcome guests in your home
- Host gatherings and parties in your home
- Have a pet
- Have a high-risk driver, such as a teen driver, in your home
Being held liable in a lawsuit could mean losing nearly everything you have. Once the limits on your primary insurance are reached, you are left to pay any remaining judgments from your personal savings and even liquidation of your assets. Imagine losing the savings account you had earmarked for your kids’ college education, with years of hard work gone for good. Even if you do not have any significant accumulation of assets, your future could still be on the line. A court could order garnishment of your future wages or inheritance to help satisfy a judgment.
You Can Afford It
You might assume that the high limits on umbrella insurance also translate to high premiums, but nothing could be further from the truth. In fact, umbrella insurance is some of the most affordable coverage you can buy – especially considering the potential benefits it has to offer. In many cases, the first $1 million of coverage is just $200 or less per year, with each additional million often costing less than half of the first. That is a small price to pay for the greater security of your income, assets and financial future.
Talk to an independent agent here at Thiel Insurance Group to find out more about umbrella insurance and whether it could be right for you. We can answer any questions you may have and also show you how to capture additional savings on coverage by purchasing your umbrella and homeowners insurance from the same carrier. Call us today to request your free quotes.
Have you ever considered how much you could lose in a major lawsuit?
