When Your Regular Insurance Isn't Enough
Sometimes bad things happen to good people; and then those good people turn around and sue the other good people responsible. If you're on the receiving end of a lawsuit or other claim involving personal injury, property damage, an auto accident or some other costly event, you may find that your regular insurance won't cover the judgment award and/or your legal costs. In such a torrential downpour of bad news, you'll be glad you have the extra protection of a special kind of coverage known as umbrella insurance. Take a closer look at how this kind of policy works, when it might be handy and what's involved in obtaining one.
What Is Umbrella Insurance?
Umbrella insurance is a supplemental insurance policy that kicks in once your standard insurance policies are tapped out by the demands of a high-dollar legal judgment against you. This type of gap insurance has becoming increasingly necessary in today's lawsuit-mad environment — especially you consider that one out of every seven personal injury judgments awards at least $1 million in damages. A typical home or auto insurance policy may cover you for $300,000 to $500,000 in such a case, leaving you to foot the bill for the rest.
Umbrella insurance can extend your total coverage by anywhere from $1 million to $5 million on top of your regular coverage. This general coverage can be applied toward any damages you're judged to have caused. Examples may include:
- Auto accident injuries in which you're at fault
- Accidents caused by your boat or other watercraft
- Personal injuries that take place on your property
- Dog bite injuries and medical expenses
- Mental anguish, slander, libel or other such injury
- Any and all legal fees associated with your case
Umbrella insurance can come to the rescue by protecting your retirement accounts, personal savings, home, car and other assets from being swallowed up in a gigantic financial award. Better yet, it extends to your dependent children if they happen to be the ones at fault.
Who Should Have Umbrella Insurance?
Obviously, umbrella insurance can prove a financial lifesaver. But how badly do you need it — and if you do need it, how much should you get? Generally, you'll need to max out your home and auto insurance coverage levels before you can get an umbrella policy. This makes sense, since umbrella coverage only applies after you've exhausted the full potential of those other policies. If your personal assets are worth substantially more than the total amount of coverage offered by your regular insurance policies, then it's probably wise to invest in umbrella insurance.
If you need another factor to throw into your decision-making process, consider your relative risk for lawsuits. Do you throw frequent pool parties in which a guest might slip on wet tile and break his neck? Do you own a dog who gets nervous around strangers? Do you do a lot of driving, or do you live in a city dominated by dense, fast-moving traffic (and expensive cars)? These and other risky scenarios may make you an especially good candidate for umbrella insurance.
How to Get Started
One other nice thing about umbrella insurance is that it's usually a great value. While you have to purchase $1 million in coverage at the very least, the deductible will be so high (equaling the sum of your other total coverage) that the premiums may come to less than $200 a year. It pays to learn as much as you can about this potentially lifestyle-saving form of coverage, so contact Su Casa Valley Insurance Services to discuss your options!