Do I Need It… Is It Affordable?
You’ve worked hard for to accumulate the assets you have. One unfortunate incident could jeopardize your financial world. What should you do? One solution is to protect yourself with an excess liability policy, also known as personal umbrella policy. An umbrella policy provides additional liability coverage, over and above the limits of liability on your automobile and homeowner’s insurance policies. When endorsed properly a personal umbrella will provide protection over your boat, motorcycle, and other recreational vehicles. Although coverage limits may vary per insurance company, you can purchase coverage in amounts of $1 million up to $5 million from most insurance companies. Several insurance companies will offer limits up to $100 million. A Personal Umbrella policy typically costs $250 for the first million and approximately $1,000 for a five million dollar policy.
Do you have a swimming pool in your yard? Do you have any youthful operators (ages 16-23) covered by your automobile policy? Is there a trampoline on your property? Do you have a high net worth? If you answered yes to any of these questions, then a personal umbrella policy would be beneficial to you. Umbrella policies may also cover certain liability issues that are normally excluded by your homeowner’s policy such as slander, libel, false arrest and invasion of privacy to name a few. (Coverage may vary per insurance company- check your umbrella policy for specific exclusions.)
In the event of a covered claim, your automobile or homeowner’s policy will pay up to the policy’s maximum limits of liability. The umbrella policy will then cover any remaining costs, up to the limit of liability purchased. To be eligible for umbrella coverage, certain limits of liability on underlying policies may be required. For example, some insurance companies require automobile liability limits at $250,000 per person and $500,000 per accident and homeowner’s liability limits at $300,000 in order to qualify for an umbrella policy.
Some of the most important benefits of a personal umbrella policy include:
- Protection for incidents involving the operation of most motor vehicles, including cars, trucks, motorcycles, Recreational Vehicles (RV’s) and most watercraft.
- Extra protection if a covered driver causes an accident and was liable for injury to others or property damage.
- Increased protection if someone is hurt on your property.
- Coverage for family members, worldwide, for actions that may cause injury to others or property damage.
- Defense coverage for attorney’s fees and other legal costs, even if you are not found liable.
The possibility of a lawsuit can happen to anyone. The best way to protect yourself is to discuss purchasing a personal umbrella policy with your insurance agent. A few minutes of your time could help prevent a significant financial loss in the future.