Accidents happen. That’s why you have liability insurance. This coverage can help you avoid financial ruin if you accidentally cause major injuries or property damage to others. However, in this litigious society, one claim can easily turn into hundreds of thousands of dollars worth of expenses. If this is the case and you have high fees to pay, you can fall back on a personal umbrella insurance policy that is meant to help protect you from the storm.
What is umbrella insurance?
Umbrella insurance, sometimes referred to as personal liability insurance, is a way to protect your savings and other assets. If you are sued for damages that exceed the liability limits of your car insurance, home insurance, boat insurance, or other personal policies, an umbrella policy helps to pay what you owe. It is a way of sheltering you from the storm when you are left exposed.
How does umbrella insurance work?
Umbrella insurance kicks in when you have exhausted your current personal insurance policies. To get a better understanding of how an umbrella policy would help, imagine the following scenario:
You run a red light and smash into another car. There is significant damage to the vehicle and several passengers are injured. The car needs $50,000 in repairs, and the total treatment of injuries costs$250,000. The driver of the vehicle is a medical professional who isn’t able to work for months because of a broken arm. They sue you for $200,000 in lost earnings. That means you’re on the hook for a total of $500,000. If you only carry $300,000 of liability coverage in your car insurance, the remaining $200,000 will have to come out of your own pocket. This could mean you need to put your assets and savings on the line to get out of the situation.
If you have umbrella insurance, it would pay the difference between what your primary insurance covers and what you still owe. Umbrella insurance would also pay any of your legal costs for a potential lawsuit. Since most umbrella policies start at $1 million, you would have enough to cover the cost of an unfortunate disastrous situation.
Do you need umbrella insurance?
Umbrella insurance isn’t just for the wealthy. Most people today can benefit from acquiring such coverage, especially those who:
- Own property
- Have significant assets or savings
- Own things that lead to injury lawsuits (i.e. pools, trampolines, dogs, etc.)
- Are a landlord
- Regularly post reviews of products and businesses
- Have a young or inexperienced driver in the household
- Frequently host parties at home
- Are a public figure
Umbrella insurance can be complex and difficult to understand at first. If you have any questions about coverage and how it can potentially help you, contact the team at Tompkins Insurance Agencies. We look forward to for helping you find the right solution for your needs.