What’s An Umbrella Policy and How Does It Work?
You may think that only the truly wealthy need the additional protection that an umbrella policy offers but people from just about any income level can benefit from an umbrella, and the good news is that they are very affordable.
Here is an often overlooked fact of a typical homeowners policy:
Liability coverage is typically capped at $100,000. While it is possible to up your coverage levels to $500,000, few people do it. Even at $500,000, a serious accident on your property will quickly exceed your limits, which is why you may want to consider an umbrella policy.
Liability covers you if someone has an accident on your property that is deemed your fault. Liability costs can range from the medical bills for a slip and fall on some icy stairs to a lawsuit after your dog takes a bite out of a neighborhood kid. Medical and legal bills can quickly spiral out of control.
You may think that only the truly wealthy need the additional protection that an umbrella policy offers but people from just about any income level can benefit from an umbrella, and the good news is that they are very affordable.
What is an Umbrella Policy?
A personal umbrella policy (PUP) provides an additional layer of protection over and above your homeowners or auto insurance policy. In other words, once your coverage limits on your homeowners or auto policy are hit, the umbrella jumps in to cover the balance.
PUPs are usually sold in $1 million increments, the majority of insurers will go up to $5 million in coverage while high-end specialty insurers can run an umbrella up to $100 million. While rates will vary, expect to pay between $100 to $200 a year for each $1 million in coverage.
Why Do I Need One?
According to experts, roughly 85 percent of umbrella claims are for car accidents but homeowners certainly benefit from the additional coverage. A slip on your stairs, a falling tree or a pet bite can result in medical, legal and settlement costs that will drain even the largest of bank accounts.
An umbrella policy can be extremely important if you have a pool or trampoline in your backyard, which are often the cause of serious, and expensive accidents.
In addition to liability issues, a PUP will also cover you against slander or defamation of character lawsuits. This can be a life (or bank account) saver if you are a blogger, writer or filmmaker that likes to take on controversial subjects. Even an off the cuff, somewhat derogatory Facebook post can land you in hot water if the person is litigious and feels that you have damaged their reputation. A large settlement, not to mention the legal fees can easily clean out your bank account.
PUP coverage doesn’t end there, it will also protect you if you are in an accident while driving in a foreign country and will even pay out if you injure someone on a rented jet, boat or other recreational vehicle.
What You Can Lose
A lawsuit settlement doesn’t end when your bank accounts are drained. Covering the medical, legal and settlement bills for someone hurt on your property puts all of your assets on the table.
This includes your house, autos, retirement and savings accounts and even future earnings if the settlement calls for garnishment of your wages. You may find yourself putting your house on the market to help pay off your new lawsuit related death.
Protect yourself and your family, consider an umbrella policy the next time you review your coverage’s. We can help you find the perfect PUP policy. Simply fill out our quick and easy home insurance quote form and our insurance agents will contact you with details on a PUP.