In today’s world, it’s important to protect yourself against lawsuits and injury claims that can exceed the limits of existing liability coverage on your home and auto policy. Increasing court costs and settlements enhance the need for umbrella coverage for many policyholders.
Why do I need it?
A lot of people sue, and they sue for a lot. Settlements or court judgments of $1 million or more are commonplace. The more assets you have, the more protection you need.
Some scenarios where umbrella coverage can protect you from lawsuits include:
- You’re at fault for an auto accident in which the other driver suffers significant injury and sues for $500,000. Your liability limit is only $300,000 on your auto policy. That means you’re responsible for the balance.
- A visitor slips and falls in your driveway, breaking his back and causing paralysis. He wins a $1 million judgment against you, exceeding the $500,000 limits of your primary insurance.
- While riding a recreational vehicle on public trails, you’re at fault for an accident resulting in serious injury of someone else, causing long-term disability. They sue for more than what your recreational vehicle policy covers.
What does it cover?
An umbrella policy provides increased liability protection above the liability limits in your home and auto policy. The policy applies to you and other relatives living in your home, including a spouse, children, or those in your care younger than age 21.
It offers extensions on the limits of your primary insurance policy for:
- Recreational Vehicles
- Personal Injury liability such as libel, slander, defamation of character, and false arrest
- Incidental Business, Office, or Home-Based Business Liability
- Uninsured and Underinsured Motorists (optional)
In addition, the coverage follows you, meaning you’re protected worldwide.
How much do I need?
The most common limit for an umbrella policy is $1 million. However, depending on your unique situation, higher limits are available. Talk with your insurance agent to determine proper coverage for your individual needs.