Personal Umbrella Liability Insurance

We all understand the general need for insurance - protecting you and your property from damage, theft, and even natural disaster. There are homeowners policies to protect your house and auto insurance policies to insure your car, but what happens when an accident occurs that exceeds the coverage these policies provide? Or what if you're sued for something that falls outside of the scope of homeowners or auto insurance? Consider the following scenarios:

• One evening while driving your SUV, you don't see a stop sign and unintentionally broadside a city bus. Several of the occupants of the bus are injured, resulting in a large lawsuit. Your auto policy covers part of the costs but you have a house with substantial equity and the insurance company for one of the injured goes after you for more money.
  
  
• Someone is visiting your house. He doesn't see your small dog running through the house and trips over him. The fall results in a broken leg and arm, causing the person to be unable to work. You are sued for a substantial sum.
  
  
• While on vacation you rent a snowmobile and accidentally hit a cross-country skier, severely injuring the skier's legs. A lawsuit ensues.
  
  
• You inadvertently cause a fire that sweeps through your entire neighborhood, causing millions of dollars in damage and resulting in several lawsuits.

The Need for Personal Umbrella Liability Insurance

In today's litigation-filled society, you don't have to be wealthy to need more protection than your existing auto or homeowners policies provide. In fact, if you want to fully protect the assets belonging to you and your family, extra coverage is not just a luxury; it's a necessity.

Although your auto and homeowners policies have at least some liability insurance that would be used to settle legal claims, each of the situations listed above are likely to result in settlements that exceed whatever coverage you may have. For example, if a settlement for a covered loss (or judgment, if it goes to court) is $1,000,000 and you only have $400,000 of liability insurance, the insurer would pay its $400,000, but the other $600,000 is your responsibility. Virtually everything you own would be fair game to pay off the debt.

An "Umbrella" of Liability Protection

Personal umbrella liability insurance fills in the gaps in two ways:

1. Increases the liability protection above and beyond the liability limits of your homeowners or auto insurance
2. Covers you for liability exposures that are not covered in homeowners or auto insurance, such as libel or slander

The personal umbrella policy coverage "kicks in" where your existing coverage ends, up to limit of the umbrella policy purchased. It can provide additional liability protection at limits of $1 million to $5 million over and above the limits noted in your existing basic insurance in your auto and homeowners policy.

A Relative Bargain

For the amount of protection you get, umbrella liability coverage is not very expensive. Premiums can be as low $100 to $300 a year for $1 million worth of coverage. The cost depends on factors such as the amount of coverage, the insurance company issuing the policy and your own personal risk factors. It is important to note that personal umbrella liability insurance can vary widely from one insurance carrier to another, so you must be careful to ensure that you're completely covered.

When purchasing a policy, remember to consider more factors than just how much your assets are worth. Although your estate might be worth $1 million, if a judgment of $2 million is rendered, not only your assets but your future income and any inheritance you have set aside for your children would be in jeopardy. Liability risks can destroy even the most solid financial planning strategy; make sure you take the extra steps to fill in the gaps to protect your future.

Personal umbrella protection can cover:

• Operating most motor vehicles, including cars, RVs, motorcycles, pickup trucks, and most watercraft
• Incidents involving any property covered by your basic homeowners policy
• Incidents alleging slander, libel, defamation of character, invasion of privacy, even false arrest
• Business liability coverage, if covered by your basic homeowners policy

Request a no-obligation quote for Personal umbrella insurance policy.

See also:

• Staying Safe When You Travel
• Why You Should Consider Long-Term Care Insurance

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• Personal Umbrella insurance