Do I need an Umbrella?

Imagine your son or daughter’s friends enjoying a pick-up basketball game in your backyard when the old, rusted goal becomes unhinged, drops on a player and injures him or her.

Or, you are in an at-fault auto accident where the other individual is injured.

If any of these injuries far exceed the base limits of your auto or homeowner’s policy, an umbrella policy can cover the claim made against you on behalf of the wronged party. First, your insurance may pay the settlement amount up to the limits of your coverage. If the settlement amount exceeds your coverage limits, your umbrella policy will pay once your basic liability limits have been exhausted. It can also protect you from bodily injury liability claims and property damage liability claims. In addition, Umbrella policies provide a broader form of coverage and can help cover legal fees, false arrest, libel and slander. Umbrella insurance can come into play if you are found liable and need to pay damages, or if you are sued and need to pay for your legal defense.

An umbrella policy also helps you protect your assets. Your car, house, investments and retirement accounts, as well as your normal checking and savings accounts and even future income, are all considered assets. If you are sued for a large amount of money and do not have enough liability insurance or an umbrella policy to cover those costs, your assets can be exposed.

People typically choose to buy an umbrella policy because they want to prevent the possibility of financial ruin due to one misstep or unforeseen accident. Coverage for an umbrella policy typically starts in the range of $150-$200 for a $1 million policy.