When is Umbrella Insurance Important?

In today’s world, insurance claims and lawsuits are growing at an alarming rate. Liability cases are everywhere you look, and many people are being taken to the cleaners for issues that aren’t even their fault. People can lose a great deal of money and sometimes their home and their savings in a lawsuit. The truth is, you don’t have to be a millionaire to be sued like one. If you have assets at stake, your assets can be taken from you in a lawsuit – which includes your home.

To protect your assets (all that you own as well as all that you have in savings) Harper Insurance recommends that you take a look at options for protecting all that you value and all that you own. Umbrella insurance, also known as excess liability insurance, is relatively inexpensive insurance that is one of the more popular options for people who wish to increase their liability limits (insurance) to protect their assets.

What is umbrella insurance, and what is it used for?

Umbrella insurance refers to an insurance policy that extends the limits of liability coverage on the assets that you own, such as your home, one or more cars, maybe a boat, and anything else you wish to insure against loss and liability. It extends the liability coverage that you have on your various insurance policies. It is usually sold in $1 million increments and can add significant liability coverage, for a reasonable premium, to the many different assets that you own and want to protect.

For example, many times a traditional homeowner’s insurance policy will only cover liability up to a certain limit (e.g., $300,000). In some cases a lawsuit could be brought against you that is well over this limit. And where does the suing party go if you don’t have the coverage in your insurance policy? They go after the things that you own – your home, your cars, and even your savings. This is where umbrella insurance really comes in handy.

Having umbrella insurance is really a personal decision that everyone needs to make. How do you decide if you need it? If you’re worried about potential liability claims against you and your family and your savings, the best thing to do is sit down with an expert to determine if umbrella insurance is right for you. Harper Insurance recommends sitting down with an insurance agent to review your options. Would it be better to increase the liability limits on your existing policies, or would it be better to obtain additional liability coverage with an umbrella policy? In some cases it might be cheaper to increase the liability limits on your existing policies. However, in other cases, it might be best to purchase an umbrella policy. Each situation warrants its own special circumstances and attention. In many cases your existing policy can be increased $1-2 million dollars without a big jump in premium.

Have your insurance agent do some calculations for you to help you decide. Also have them explain the various types of liability coverage in detail. What you don’t know CAN hurt you. When it comes to liability coverage it’s better to be safe than sorry, and you can never be too careful. With the litigious society that we live in you never know when you might be affected by a lawsuit. It’s usually better to err on the side of caution. You don’t want everything that you’ve worked so hard for to be gone in a flash.