Why is umbrella insurance important

Please contact your advisory team with any questions you may have about ensuring that your coverage is appropriate for your situation. Are you doing what it takes to enter your dream retirement? Why is Umbrella Insurance Important? Meaningful extra liability coverage Umbrella Insurance is an additional layer of insurance that can help pay for medical, court and other expenses that an individual may be required to pay after basic home and auto insurance policies hit their maximums.

Protecting your assets is just as important as growing them, especially when umbrella insurance costs relatively little to carry. Do you own, rent or borrow things that can lead to injury?

If you have a pool, tree house, ATV, trampoline or dog, you could be liable for major expenses if somebody gets hurt on your property. Umbrella coverage can help offset any major expenses you might incur through this work. Do you participate in sports where you can easily injure others, such as skiing, surfing, hunting or — my personal favorite — mixed martial arts? If you were to accidentally cause someone else injury and they sued, umbrella insurance would likely cover you.

Your policy can also protect against liability claims against you while traveling outside of the United States. If you need to protect yourself from defamation lawsuits, like libel and slander, consider umbrella coverage. Those proceedings can get costly quickly.

Once you know you need a policy, determining the right amount is fairly simple: Subtract your respective liability coverage limit from all assets at risk, including home equity, personal property, investments and savings. A negative result indicates a gap in coverage, which umbrella insurance can help fill.

And finding funds to pay for the policy can be simple, too. This change should help reduce the cost of monthly premiums and give you the cash flow savings needed to afford this new policy without any additional outlay. Privacy Statement. The Importance of an Umbrella Policy Posted by the knowledge brokers.

Please feel free to contact a knowledge broker for more information on umbrella policies. Subscribe to Email Updates. Recent Posts. Develop and improve products. List of Partners vendors. 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. Umbrella insurance is a type of personal liability insurance that can be indispensable when you find yourself liable for a claim larger than your homeowner's insurance or auto insurance will cover. If you own a boat, umbrella insurance will also pick up where your watercraft's liability insurance leaves off.

Umbrella insurance even covers certain liability claims those policies may not, such as libel, slander, and false imprisonment. And if you own rental property, umbrella insurance provides liability coverage beyond what your renter's policy covers. Umbrella policies also cover malicious prosecution , wrongful entry, invasion of privacy, and other hazards.

As you might have gleaned from these examples, umbrella insurance covers not just the policyholder, but also other members of their family or household. Many insurance companies say you need it because of the lawsuit-happy world we live in, where anyone can sue you for anything and ruin you financially. You can find plenty of personal liability horror stories in the news, where juries awarded multimillion-dollar judgments to the victims that individuals had to pay.

But how likely are you to find yourself in such a situation? Do you really need umbrella insurance? As a general rule, you might hear you should purchase umbrella insurance if the total value of your assets, including ordinary checking and savings accounts, retirement and college savings and investment accounts, and home equity is greater than the limits of your auto or homeowner's liability.

The real question you should ask yourself is, am I at risk of being sued? Everyone is, so in a sense, umbrella insurance makes sense for everyone.

But some people are more likely to need an umbrella policy than others. Personal liability risk factors include owning property, renting it out, employing household staff, having a trampoline or hot tub, hosting large parties, and being a well-known public figure.

Having a teenage driver in the family also puts you at increased risk, as does owning a dog or owning a home with a swimming pool. Basically, the more likely you are to be sued, the more strongly you should consider purchasing umbrella insurance. You throw a large holiday party, and one of your guests slips and falls on your icy front steps. She ends up with a concussion and some astronomical medical bills and decides to sue you.

The money will have to come out of your retirement account, your main source of savings. The cost of an umbrella liability policy depends on how much coverage you purchase, the state where you live insurance rates vary by state and the risk that insuring you presents to the insurance company.