Umbrella Insurance: What it is and how you can benefit from it.
You have done your due diligence and have insurance policies in place that protect you and your assets. This is all you need, right? Unfortunately, in today’s litigious society, more and more people are turning to umbrella policies to add an extra layer of peace of mind to their lives.
For example, you might be involved in an accident at home or with your vehicle and it was determined you are at fault. Depending on the damages, you might find yourself the target of serious litigation that can easily exhaust your current liability insurance, leaving you on your own to cover the rest of the costs - which can add up to millions. That’s just one scenario. There are several reasons you should seriously consider adding it to your current policies. Let’s start by looking at what an umbrella policy does.
An umbrella policy is a secondary form of insurance that cannot stand alone. It covers your personal assets should you be in the unfortunate circumstance of a lawsuit where your liability coverage simply isn’t enough to cover damages awarded due to your negligence. In other words, if you are found at fault in causing an accident and the other party sues you, this policy will protect your assets and future financial earnings from being taken to pay for the damages caused as a result of your negligence. Since we cannot predict a circumstance like this, it may seem like a waste of money on a “what if” scenario. However, you should be looking at it much differently.
Liability insurance only covers so much. Think about your current assets, your future income, your investments, your savings. Can you stand to lose all of that due to one unfortunate and unpredictable situation? Some of you might even be thinking that you don’t have much now so what can they possibly take? Your future earnings can easily be garnished to pay for damages. This means that any money that you make for the rest of your foreseeable future can be taken from you. An umbrella policy prevents this type of situation from happening.
There are many different types of umbrella policies available and you should talk with your insurance agent to find out which one is right for you. All in all, adding a policy that protects you from litigation and legal defense costs is simply a smart investment to make.