The Advantages of Personal Umbrella Insurance for New Jersey Residents
Most New Jersey homeowners and drivers carry insurance to cover against auto accidents and damage to their homes. What many people don’t realize is that these policies have liability limits that may not cover all of the property and assets they own. To fill in this gap in coverage, a personal umbrella insurance policy is often advisable.
Here is an example of the possible exposure a New Jersey resident may have under their regular insurance policies. Let’s say you have an auto insurance policy with a $500,000 liability limit (most people have smaller limits than this) and you have an accident involving multiple cars that results in damage claims against you of $1 million. Your auto policy will only cover up to the maximum coverage of $500,000, leaving you at risk for having to pay the additional amount.
If the amount not covered by your auto insurance policy is $500,000, this may have to come from your savings, investments, home equity, personal property, or even wages over a period of time. This can result in financial hardship, possibly leading to bankruptcy or foreclosure. A personal umbrella insurance policy can help protect you from this scenario.
Here’s how it works. For a nominal annual rate of roughly a few hundred dollars, you can purchase an umbrella policy with excess liability protection for your auto and/or homeowner policy starting at $1 million and going up to several million. If the liability limits on the regular policies are ever exceeded, the umbrella policy will kick in and provide additional liability protection up to its policy limits.
If you have significant financial assets to protect, then personal umbrella insurance makes a lot of sense. If you don’t have as much to protect, it may still make sense to purchase an umbrella policy to protect against wage garnishments, but you probably wouldn’t need as high a liability limit. As always, feel free to contact one of our agents to discuss your personal insurance needs and find out what king of umbrella policy is right for you.