Insurance gives us the assurance we need knowing that we are protected against major financial losses. If you have high-limit liability protection on your home and auto insurance, you are off to a great start. But what happens if you are sued for more than your insurance will cover? How will you pay for a million-dollar lawsuit if your liability coverage is capped at $300,000? For these scenarios, there is umbrella insurance, and it could save you from paying hundreds of thousands of dollars in out-of-pocket damages.
Lawsuits Can Happen to Anyone
When it comes to lawsuit protection, you can never be too careful. If you drive a car, own property, have a dog, or welcome guests to your home, you are at risk of a lawsuit. If you have a long commute, a high-risk teen driver, or own a swimming pool, your risks are even higher. All it takes is one accident to cause a lifetime of financial damage.
For example, imagine that you have auto liability insurance that covers you for $250,000 in bodily injuries per victim in an accident, with up to $500,000 total coverage available per accident. You lose control on the highway one day, sliding into two separate vehicles before coming to a stop on the side of the road. Not only is your property damage liability not enough to pay for the replacement of both vehicles you damaged, but there were four different drivers and passengers who were severely injured in the collision.
You are sued, and the sum of judgments brought against you is $1.5 million. Your auto insurance covers only one-third of the bill, leaving you on the hook for a million dollars. With umbrella insurance, you are fully covered for the balance of the judgment. Without it, you might be forced to liquidate your assets, drain your savings, and make years of future payments from your income and any inheritance you may receive.
Understanding Umbrella Insurance
Umbrella insurance is a high-limit supplemental liability that is purchased in addition to your auto and homeowners insurance policy. Unlike excess liability coverage, which is more restrictive on coverage and merely extends the limits of your existing liability protection, a true umbrella insurance policy will also broaden your coverage to include personal liabilities not covered under your primary policies. This often includes coverage against libel, slander, false arrest, and damages you cause when traveling abroad.
Most insurance carriers require a minimum amount of home and auto liability protection before issuing umbrella policies. In most cases, this includes:
- $300,000 or $500,000 homeowner liability
- $250,000/$500,000 auto bodily injury liability OR
- $300,000 combined single limit (CSL)
If your current coverage does not meet these requirements, you can contact an agent here at Vanyo Insurance Group to increase your limits. Once you have adequate coverage, umbrella insurance policies become available at an average of $200 per year or less for $1 million of coverage. Additional coverage is even more affordable and typically added in $1 million increments. Our team can also show you how you might qualify for additional savings on insurance premiums by purchasing your umbrella insurance and homeowners insurance from the same carrier. Call us today for more information and to request your free quotes.
How much would you have at risk in a lawsuit? Your savings? The money you have saved for your dream home? Your kids’ college education?