No one knows if they will be faced with losing a lawsuit resulting from a car accident or an accident on their property. It is nearly impossible to predict the amount that might be awarded to the winning party. If this occurred, you would be responsible for this hefty expense, so it is imperative that you protect yourself against the possibility of financial devastation from these unforeseen events, which you can do by securing an umbrella insurance policy.
Even if you are not technically considered at high risk of being sued doesn’t mean you are not at risk. Although you may consider yourself a very careful person, umbrella insurance can be your saving grace in a time of need. It is always better to be safe than sorry and be properly insured. Also, note that as financial situations evolve, you may need to add more coverage in the future.
The Ins and Outs of an Umbrella Policy
An umbrella policy is designed to protect current personal assets and future personal assets such as wages, your inheritance, or that lottery you may be trying to win against the cost of losing a lawsuit due to a car accident or an accident on your property. If you were to lose such a lawsuit, you might be faced with covering the winning party’s expenses, like medical bills and lost wages, which quickly adds up and can be very expensive.
Contrary to popular belief, an umbrella policy is not only for the wealthy, as even those with no assets at all, the wages can still be garnished. An umbrella policy will pick up where standard auto and homeowners insurance policies leave off. It was purposely crafted with a high deductible to be met by your other policies.
Coverage Where it Counts
Personal umbrella insurance offers excess protection that goes above and beyond what is provided by your homeowners and auto insurance policies. For instance, if your auto insurance covers $300,000 of medical expenses per accident and your umbrella policy is for $1 million, then if you were to be sued for $900,000, your auto insurance would pay $300,000 of the damages, and your umbrella policy would take care of the remaining $600,000. Umbrella policies usually provide the additional coverage you need, and you can even choose to get more coverage if you have many assets to protect.
Regarding legal expenses you would incur if you’re sued, umbrella policies cover legal expenses on top of the policy amount. The policy may also pay you if you are forced to lose income from work because you have to be present for a court date. Insurers can protect your money with their own legal team, possibly a better legal team than you may be able to afford on your own.
On top of protecting you from accidents on your property or car accidents you are held responsible for, an umbrella policy can also protect your dependent children from any accidents they caused by:
- Operating a watercraft
- Accidents that occur on a rental property you own
- Personal injury lawsuits arising from slander, libel, defamation of character, false arrest, detention or imprisonment, abuse of process, malicious prosecution, and mental anguish
You will need to reference your specific policy for details. Since this is a personal policy, it will not cover lawsuits related to a business you own, which even includes babysitting. It also does not cover certain high-risk activities and unnecessary use of your vehicle, such as drag racing. Furthermore, an umbrella policy does not cover any crime. With these exclusions, if you’re concerned about being covered for a specific event, you can consult with your agent. If it lacks in some area, see how you can secure additional protection.
The Insurance Requirements
This policy was created as a form of secondary insurance and has underlying insurance requirements, so you must have a certain amount of auto insurance and homeowners insurance coverage as a foundation to be approved for an umbrella policy. It may be in your best interest to have all of your policies with one insurer to not only make it easier, but to save money. Without underlying insurance required by an umbrella policy, this will also effectively make your umbrella policy more expensive.
Keep in mind that certain situations increase your risk of being sued. For instance, if you always take public transportation and don’t own any property, you are much less likely to need an umbrella policy. However, on the contrary, there are a few things that increase the likelihood of requiring an umbrella insurance policy such as:
- A long commute
- Driving during rush hour, when drivers are more likely to get into an accident
- Owning a swimming pool
- Owning a dog
- Frequently having guests over
About Thayer Innes and Freeman Bunting Insurance Agencies
At Thayer-Innes Insurance Agency and Freeman Bunting Insurance Agency, we strive to provide comprehensive insurance solutions to support Ann Arbor homeowners. Our homeowners’ policies can be tailored to meet your specific risk exposures and provides much more coverage than a traditional policy, giving you the peace of mind you deserve. For more information about our products, contact us today at (855) 395-6316.