Umbrella insurance policies give you that little extra assurance by reducing risk & protecting your assets with increased coverage.
This policy provides funds to cover the costs that may be incurred from being sued; due to events that are not covered under your home or property insurance, or that exceed the limits of the coverage you have.
For Example:
You have $500,000 liability coverage.
It’s a beautiful July evening, you have a get together at your house. Your son, with several other teenagers, decide to take your car on a joy ride. The roads were slick from a rain, and your unlicensed son has no experience on the wet streets. He brakes, starts to slide, cranks on the wheel, he swerves to avoid hitting a parked car, loses control completely, and drives through the wall of a small restaurant. Several of the customers and staff are injured, when the car causes the ceiling to let go. You are financially responsible for this tragedy.
Potential Liabilities & Costs:
Medical – Rehabilitation – home care – loss of income payments to victims- legal/counsel fees – restoration of the exterior and interior of the restaurant, window and door replacements Total Cost Estimate: $950,000 Without umbrella insurance, if you are sued in court and lose… You are now responsible for the entire amount that exceeds your coverage. $950,000 – $500,000 = $450,000
You will pay this amount with your; cash, investments, vehicles, home or any asset you own. It is a very scary thought.
What happens if you all you own does not cover the amount owing?
If it is not sufficient to cover the settlement you can be court-ordered to pay from the earnings you will make in the future. Yes, that’s right, you could be paying until you are unable to work anymore. With an umbrella policy of $1,000,000, you would be entirely covered for the $450,0000 that exceeded the limits of your homeowner’s policy.
The true beauty of umbrella insurance policies is that they can be applied to your existing insurance plans providing a blanket of security.
If you had an accident with your vehicle, and the amount of the settlement, exceeds your coverage limit, the umbrella policy would make up the difference up to its maximum.
