Why Everyone Should Consider an Umbrella Insurance Policy (Part 1 of 2)
Many people in this country consider themselves insurance poor; that is, going broke just buying the insurance that is ‘required.’ And with the difficult economy, a growing number of people are finding it tough to pay for just the basics. However, there is one type of insurance that everyone should take a serious look at; umbrella policies.
Umbrella insurance is basically an extension of your standard auto and homeowner policy liability coverage. These policies are best purchased together with your standard policies and are often discounted when bundled through the same insurance carrier.
When it comes to umbrella insurance policies, the most often asked question is “who really needs to buy this type of coverage?” And since there is no state or federal law compelling you to do so, the decision on whether or not to buy umbrella insurance will depend largely on your individual circumstances.
There is, however, a common misconception about the ideal candidate for umbrella insurance. Many in the public and even some agents will tell you that you really only need an umbrella policy if you have significant assets you want to protect. And yes, it’s true that if you do have sizable assets, you definitely need to have this type of protection.
For example, if you have a total net worth of $5 million, someone is injured at your home and sues you for $1 million, and your homeowner policy only covers you for $500,000, then the additional $500,000 will come out of your pocket. However, if you owned an umbrella insurance policy for $1 million, then you would be fully protected in this instance.
Another example would be if you got in an accident with someone and injured them, and they may decide to sue you for damages. And let’s say they are awarded $1 million for personal injuries. If you have an umbrella policy for $1 million, you would also be covered in this scenario.
Please stay tuned for part two of umbrella insurance policies to learn about other benefits of adding this protection to your insurance portfolio.