- Posted April 30, 2019
The Importance of an Umbrella Policy
It is important to have adequate insurance so, if an accident were to occur, you would be properly protected. Enter: an umbrella insurance policy. Umbrella insurance policies are a supplement to your existing automobile, homeowners, or liability insurance. They offer more protection from losses because they begin once your other policies have exhausted their liability limits. If you are sued for being at fault in a car accident, an injury occurring on your property, or a case of slander, then an umbrella policy will help to ensure that you are covered.
According to Jury Verdict Research, “13% of personal injury liability awards and settlements hit the one million dollar mark or higher”[1] If you are a part of this 13% and do not have an umbrella policy, then you may face some financial difficulty trying to pay for the damages because you will be required to pay out of pocket.
Who should purchase an umbrella policy?
Umbrella insurance is suitable for a lot of people but if your risk is especially higher than the average person, you may have a greater need for a policy. Things that can make a person at higher risk having assets that are considered risky such as a trampoline, a pool, or a dog. Additionally, if a person is a landlord of a rental property then they may also have extra liability for any damages that can occur from their renters. Many people who are in need of an umbrella insurance policy do not have one.
It is important to note that there are a few things that umbrella policies do not cover:
- Business losses
- Criminal offenses
- Written or oral contracts
- Damages to your personal property in which you are at fault
The cost for an umbrella policy can be quite reasonable, so you may want to talk to your CFP® to see if adding an umbrella policy to your existing policy if right for you.
Resources:
https://www.allstate.com/tools-and-resources/personal-umbrella-policy/whats-umbrella-insurance.aspx
https://www.investopedia.com/terms/u/umbrella-insurance-policy.asp
[1] https://www.insurance.com/auto-insurance/coverage/umbrella-insurance-policy-guide.htm
