In today’s economy, everyone is pinching pennies. So why worry about umbrella coverage? Shouldn’t a home and auto policy leave you adequately covered?
Unfortunately, we live in a world of lawsuits. Large damages can be awarded, be extremely expensive, and have a long-term financial impact. This is why umbrella insurance coverage can be a good idea.
What Is Umbrella Insurance Coverage?
An umbrella insurance policy is a type of personal liability insurance that covers claims in excess of existing limits and coverages on other policies such as your homeowners or auto policies. It is extra insurance protection for unforeseen events that lead to injury or property damage and is an inexpensive way to get significant extra liability coverage. Umbrella insurance does not cover your property, but helps cover costs when you are being sued for injuries caused to others in an accident or damages to someone else’s property.
How Does an Umbrella Insurance Policy Work?
If you are involved in a lawsuit and sued for damages above your primary liability limits, an umbrella insurance policy helps pay what you owe. It pays the difference between what your primary insurance policy pays and what you still owe. Umbrella insurance also provides coverage for your legal costs in the lawsuit.
What Does Umbrella Insurance Cover?
Umbrella insurance generally provides liability coverage for claims related to injury to others or damage to their property. It covers you beyond the liability limits of your current insurance policy.
Why Do I Need Umbrella Insurance?
While the chances are low that you will lose a lawsuit for an amount greater than what your insurance policy will cover, it can happen and it is a good idea to be prepared. Lawsuits can come from a variety of unlikely sources, such as our furry friends.
Take Herschel for instance. Herschel is a much-loved, rather timid labradoodle who enjoys taking naps on the driveway while his owner mows the lawn. Herschel watched from eight feet away as his neighbor, a 39-year-old man, showed off his rollerblading skills to his kids. The man wiped out on the sidewalk in front of Herschel’s house and broke his leg. He required surgery, costing around $35,000 in medical costs and $18,000 in lost wages.
Fair or not, the man brought a lawsuit against Herschel’s owner, suing for $220,000 in damages. He alleged that Herschel had caused the accident by getting in his way, despite multiple witnesses to the contrary.
But Herschel’s owner was lucky—a jury vindicated Herschel. However, lawsuits such as these can easily exceed the limits on a homeowner’s policy, leaving the insured responsible for the remainder. An umbrella policy prevents that, giving you an extra $1 million to $5 million in coverage.
Protect what you love. Contact your agent at Zuber Insurance to talk about umbrella policy options.
Reposted with permission from the original author, Safeco Insurance®.