Umbrella insurance refers to liability insurance that is in excess of specified other policies and also potentially primary insurance for losses not covered by the other policies. You should not have to worry about being sued after you have built up some wealth. So how do you protect yourself and your money? Let us explain why you should have umbrella insurance.
How Does Umbrella Insurance Work?
It’s a low-cost way to get significant extra liability coverage. Chances are slim that you will lose a lawsuit for a sum greater than what your existing insurance will pay—but if you ever did find yourself in that situation, you could lose all your savings. Umbrella insurance is designed to make sure you never find yourself living that nightmare. Below, we’ll take a closer look at this extra liability coverage: how an umbrella policy works, who needs it, how much it costs and what it won’t cover. Say you have $500,000 in liability coverage on your auto insurance and one accident cost you $1 million in damages and injuries. Your umbrella insurance will step in and instead of clearing your retirement fund or going back into debt, it will cover the remaining $500,000 your auto insurance did not cover.
Why Do I Need Umbrella Insurance?
To best answer, that question, consider the assets you own, and the role they play in fostering your financial security. When thinking about assets, there are obvious items that come to mind: your car, house, investment accounts, and checking and savings accounts. But more broadly, even your projected stream of future income can be viewed as an asset. In fact, it may even prove to be the most valuable asset of all. You have worked decades to build up your savings and investments. Unfortunately, that money could be gone in the blink of an eye because of a nasty lawsuit. You have heard of some of the decisions for serious accidents, 20 million, and sometimes more. Keep in mind they are accidents that no one did maliciously or intentionally. But those on the losing end of the lawsuits lost millions. That is why you need an umbrella plan.
Who Needs Umbrella Insurance?
If you are starting to build up some wealth in your retirement accounts, and are making a good salary, and have paid off your home or have sizeable equity, you need umbrella insurance. If you have a net worth of $500,000 you definitely need it. It is the best buy in insurance. $1 million in coverage cost about $200.00 a year.
What Does the Umbrella Insurance Cover?
The added coverage provided by an umbrella insurance policy is most useful to high net worth individuals who own a lot of assets—or very expensive assets—and are at significant risk of being sued. Small businesses also use an umbrella insurance policy to guard against potential monetary damages arising due to claims. In particular, you would have extra coverage for bodily injury, injury to reputation, property damages, and court costs
What Does Umbrella Insurance Not Cover?
It does not cover damage to your own home, car, or possessions. Be aware that there are four things umbrella insurance does not cover…
- Personal property
- Criminal acts
- Flood damage
- Contracted worker injuries
How Do You Buy Umbrella Insurance?
In order to buy umbrella insurance, you must have a homeowner’s or auto insurance policy. Umbrella insurance is an add-on to an already existing policy. You cannot buy umbrella Insurance separately. There is not a deductible on Umbrella insurance. You will pay the deductible on your homeowner’s or auto insurance first. Then your umbrella insurance will kick in if necessary.
How Much Umbrella Insurance Do You Need?
The minimum you can purchase is $1million. Each person’s individual lifestyle will determine how much insurance you will need. If any of the following apply to you, you will need more than $1 million coverage…
- Do you have a pasture or beachfront property?
- Do you have ATV”S, dirt bikes, jet skets, or boats?
- Do you play the host or hostess on a regular basis?
- Do you have trampolines, pools, playgrounds, treehouses for the children?
- Do you drive a $100,000 sports car?
- Do you own rental property?
- Do you have a public profile of success and wealth?
Here is the deal, if you have wealth, you are at risk of being sued. All it takes is one nasty lawsuit to take it all away. Do not put this off if your net worth is about $500,000. Go tomorrow to your independent insurance agent and sign up for umbrella insurance.
Rollins Insurance represents multiple A-rated insurance companies to make sure we deliver the most competitive rate packages to our clients in Kentucky and Ohio.
Rollins Insurance is an independent insurance agency providing our clients the best prices with the most coverage possible since 2008. We represent multiple A-rated insurance companies to make sure we deliver the most competitive rate packages to our clients in Kentucky and Ohio. We find that most people are under-insured and over-paying when we meet them. We love what we do and our primary business is Personal Auto, Homeowners, and Life and Health insurance. We are a family-owned and managed business that specializes in providing needs-based insurance services.
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