Why You Need a Personal Umbrella Policy
Do you have assets that would be at risk if you were sued for damages resulting from an accident? If so, a personal umbrella policy could be a wise investment. This type of insurance provides additional liability coverage above and beyond what is included in your homeowners, auto, or other policies.
What is a Personal Umbrella Policy?
A personal umbrella policy is a type of insurance that provides additional liability coverage beyond the limits of your primary insurance policies. This coverage kicks in if you are sued for damages that exceed the limits of your other policies.
For example, let’s say you are at fault for a car accident that results in significant injuries for the other driver and passengers. If your auto insurance policy only covers up to $500,000 in liability damages and the victims sue you for $1 million, you would be responsible for paying the remaining $500,000 out of pocket. However, if you had a personal umbrella policy, it could provide coverage for that remaining amount.
Why Do You Need a Personal Umbrella Policy?
There are several reasons why you might need a personal umbrella policy. Here are some common scenarios where this type of insurance can be beneficial:
- You have significant assets that could be at risk in a lawsuit
- You are considered high-risk for accidents (e.g. you have a long commute or drive frequently on busy highways)
- You have a high-net-worth and could be a target for frivolous lawsuits
Keep in mind that even if you don’t have significant assets currently, your financial situation could change in the future. If you are sued for damages that exceed your insurance limits, you could be forced to sell assets or declare bankruptcy to cover the costs. A personal umbrella policy can provide peace of mind and protect you from financial ruin in these situations.
How Much Coverage Do You Need?
The amount of coverage you need depends on several factors including your assets, income, and the level of risk you face. Most personal umbrella policies provide coverage limits of $1 million or more, and some insurers offer coverage up to $10 million.
To determine how much coverage you need, consider the total value of your assets (including your home, investments, and other property). You’ll want to make sure your coverage is high enough to protect those assets in the event of a lawsuit.
Conclusion
In today’s litigious society, a personal umbrella policy can be an essential investment for protecting your assets and ensuring your financial stability. By providing additional liability coverage above and beyond your primary insurance policies, this type of insurance can give you peace of mind and protect you from financial ruin. Be sure to speak with an experienced insurance agent to determine the level of coverage that’s right for you.
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