Umbrella Liability insurance is the extra safety net that provides benefits when your underlying policies (Auto & Homeowners Insurance) have reached their maximum or have gaps in coverage. Many people decide not to purchase umbrella policies because:
| Umbrella policies are for wealthy people. |
False - The need for additional protection has nothing to do with what you own. In today’s litigious society, more and more Americans get sued everyday and more of these lawsuits are winning awards in the millions of dollars.
Keep in mind that any amount awarded that is not covered by the liability coverage in your auto or homeowners policy puts your personal assets and future income at risk, as these are fair game for the courts to settle your debt. See the example below. |
| The premiums are too expensive. |
False - Dollar for dollar, umbrella policies are relatively inexpensive, especially when you consider the level of protection that is provided. Included in the policy is coverage for legal fees to defend you even if the lawsuit is frivolous. Premiums are usually $200 to $300 a year for $1 million worth of coverage. |
| Umbrella policies are too complicated. |
False - Bohn Insurance can evaluate your current coverages and coordinate your policy limits to make sure you have complete coverage against liability risks. |
For reference the NY Times published an article called “Umbrella Coverage for Preventing Your Ruin”.
So, how does an Umbrella Policy work?
If someone were to successfully sue you for $1.5 million, by the example graphic above, you would only pay $500 under the Auto or Homeowners policy (whichever is involved). The underlying policy (Auto or Homeowners) would pay $299,500, and the Umbrella policy would pay the remaining $1.2 million plus the legal fees to defend the case. Worthwhile coverage when you consider that without it, you could lose all that you own and a portion of your income for decades in order to satisfy the judgment plus any legal and attorney’s fees not covered by the underlying policy.
If you don’t already have this coverage, please contact us to find the Umbrella Policy that's right for you