What Is Umbrella Insurance and Do I Need It?

Understanding Umbrella Insurance:

An umbrella insurance policy is additional liability coverage that goes beyond the limits of the insured's home, auto and other policies. Umbrella insurance is designed to add an extra layer of protection to those who are liable for damage to other people's property or injuries caused to others in an accident. Purchasing an umbrella policy can also fill in any gaps in coverage between your other existing policies. The beneficial purpose of umbrella insurance is meant to secure you should you be deemed legally responsible for damages/injuries to a person or property; this can also include a non physical injury such as libel or slander. Without this coverage, unfortunate mishaps would have to come out of your pocket to pay for such damages.

How Much Is Umbrella Insurance Worth?

Most umbrella policies are sold in increments of one million dollars. You will typically see $1, $2, $3, $4 or $5 million of liability coverage. In order to determine how much coverage is enough for you, you will want to consider some of the following: your home, any vacation homes you may own, any investment/bank accounts in your name, your earning capacity/annual income and your future pension income should you qualify. So, for example, if you were to purchase a one million dollar umbrella policy and you have an existing auto policy with a $300,000 liability limit, you would then have a total of $1,300,000 worth of liability coverage. The same holds true when it comes to your homeowners insurance. If you have a current policy with a $500,000 liability limit and you purchase a one million dollar umbrella policy, you will have $1,500,000 worth of coverage for any homeowner liability claim.

When Does an Umbrella Policy Come in Handy?

Picture these scenarios.....

1. You have been involved a car accident on a residential street that is your fault. The accident results in a fire that causes $600,000 worth of damage to a home. Your auto insurance policy has a $100,000 liability limit. Since you have already purchased a one million dollar umbrella policy, it will now take care of the remaining $500,000 worth of damage.

2. You are hosting a New Years Eve party at your home. One of your guests trips and falls down your winding stairs and is left with some pretty substantial injuries. You are now responsible for his $800,000 worth of medical bills. You only have $300,000 of liability coverage in your homeowners policy. However, this is where your one million dollar umbrella policy kicks in and covers the remaining $500,000 of medical expenses. Whew!

3. You have been in a car accident that has injured the other person in the vehicle so badly that they are not able to work again. The accident was your fault so you are responsible for all of the damages. This includes the $2 million a jury has granted them. You have just recently purchased a $5 million umbrella policy which means you get to keep your paychecks, home and any/all of your other assets.

.....can you imagine being in one of these situations and not having umbrella coverage? Without an umbrella insurance policy you would be stuck having to pay out hundreds and thousands of dollars from your own pocket. Umbrella insurance gives you peace of mind knowing you are protected from such unfortunate and unexpected events. Luckily for you, it only takes one umbrella policy to help protect it all.

If you have any questions about umbrella insurance or how it works in protecting the life you have built, give our office a call at (225)292-7680 and talk to one of our knowledgeable agents today!

What Is Umbrella Insurance and Do I Need It?

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