Today we encounter litigations left and right. Unfortunately, we are always in a near-constant risk for a costly lawsuit, even if we have not done anything. The worst part is that constant risk of a lawsuit is for everyone, regardless of social class. Nonetheless, those with substantial wealth are more likely to find themselves in potentially devastating lawsuit.
In the event you find yourself being sued, your homeowners or auto insurance will most likely offer and provide liability coverage. However, those insurance policies can cover you to a certain max, until you must pay out of pocket. Therefore, you should consider adding an extra layer of protection by investing in a Personal Liability Umbrella Insurance.
Better Safe than Sorry:
An Umbrella Insurance is a policy to make sure you are best protected from any lawsuits against you, which covers you beyond what your homeowners, auto, watercraft or any other personal insurance policies can. These insurance policies can protect you from lawsuits relating to medical bills, lost wages, court costs, and any other expense.
Consider this situation: You cause a car accident, where multiple people are seriously injured. The total of medical costs is $800,000, which exceeds the $250,000 in your auto insurance policy capacity. In the event you are covered by an Umbrella Insurance, the umbrella insurance will pay the remaining $550,000, along with the legal fees that are applied in the case you lose the court case. Depending on whether you win or lose, your legal fees would be covered.
Nevertheless, medical bills and legal fees are only a few of the potential devastating expenses you can encounter. Now to further demonstrate this, let’s say in the above instance, one of those severely injured takes four months of recovery. This implies the person lost 4-months of wage, which is equal to $80,000. If you are covered by the Umbrella Insurance, then this policy will make sure to pay back that money. In the event that you do not have this insurance, then you are responsible for covering the medical expenses plus the legal fees, as well as the 4-month lost wage, exceeding $630,000. Your personal assets, including your home and/or retirement savings are at risk, in order to cover the cost.
Should You Have Umbrella Insurance:
Umbrella insurance should be purchased if you have the means to purchase it. Anyone can be sued at any time for anything. In other words, it is good idea to be covered if you are engaged in any activity that can leave you liable for a judgment, which exceeds your policy limits. In the event you are found liable, the court can allow plaintiff to go after your future earnings, potentially garnishing your wages for years. In other words, not only does the umbrella insurance protect your current assets, but also your future ones.
If you find yourself saying yes to the following events, you should especially consider purchasing umbrella insurance, to stay protected.
- You have a swimming pool, hot tub, trampoline, playground set, or any other potentially dangerous recreational equipment.
- You employ household staff
- You are a well-known public figure
- You have a tendency of hosting large events in your home
- You have dogs, horses, cattle, and any other large animals
How Much Coverage is Enough?
Although it varies per individual, most people are adequately covered with a $1 million umbrella policy. In the case you earn more than $100,000 a year or have more than $1 million in assets, you may want to invest a bigger coverage. It is best recommended to purchase coverage at least equal to your net worth.
Remember, as mentioned above, not only are your current assets at risk, but so are your future ones. Even if you have a limited income and assets, your future ones can take a toll on as well if you are sued. This is especially notable in career paths that grow over the years, such as law, medicine, or financial management.
How Much Does Umbrella Insurance Cost?
If you compare umbrella insurance to other insurance policies, it is fairly inexpensive. Commonly speaking, people can purchase a $1 million umbrella insurance coverage for $150 to $300 per year (Insurance Information Institute). An additional $1 million in coverage can be purchased for between $75 to $100 extra. And any other additional million added to the coverage will be roughly $50 additional.
Umbrella insurance aren’t as costly as what many people believe because they only go into effect once your underlying homeowners, auto, watercraft, and any other additional policy is exhausted. Taking this into account, most insurers require you to have a minimum of $20,000 in liability on your auto policy and $300,000 on your homeowners before selling you a $1 million umbrella policy.
Where Can I Purchase Umbrella Insurance?
Along with your homeowners and business policies, you can purchase an umbrella insurance. As a matter of fact, some insurance companies require you to purchase all of your policies through them, before being eligible to purchase an umbrella insurance. Additionally, it is vital to note that if your current insurance company offers umbrella insurance, you may possibly qualify for a discount for bunding all your policies into one company. Nonetheless, you can still purchase a stand-alone umbrella policy, so shop around for the best rates.
An Extra Layer Never Hurts:
Don’t forget no matter how precautious and careful you are, accidents happen all the time and no one is immune to the threat of being sued. Guarantee your family’s current wealth and future wealth and consider purchasing an umbrella policy for you and your loved ones. Consult with us, here at Legacy Counsel, today to help you better determine if purchasing umbrella insurance is a good fit for you.
At Legacy Counsel, we consider your assets, your levels of risk and analyze your current insurance coverage to help you best determine whether umbrella insurance is right for you. With doing so, we can assist you in finding the best coverage in policy to best protect your family and its wealth from the lawsuit-crazy society we live in. Contact us today!
