What is UMBRELLA Insurance and Why do I need it?

What would you do if you were sued? Think about it. It can be a very scary time of your life where uncertainty and frustration can cause havoc on your peace of mind. I’ve seen dozens of lawsuits over the years. The dollar amounts requested by personal injury attorneys and their clients can be very high, often $1 million or more.
Here’s a few examples: - A neighbor who was visiting a homeowner fell down the basement stairs and suffered a serious back injury. - While driving his car just after dusk, a man struck a pedestrian on a bicycle who suffered life-threatening injuries. - A young driver lost control and rolled her car over an embankment. Several of her passengers were severely injured. - A drowning in a pool. - A trampoline injury. - A boating accident where the operator did not see the individual on a jet ski nearby.
Yes, I do mean to scare you with these examples. They happen to real people just like you and me. And the effects can be life changing - not just to the victim, but to you!
We discussed previously that you should carry at least $300,000 liability on all of your insurance policies (auto, home, motorcycle, boat, seasonal property, etc.) An umbrella is actually an extra layer of insurance that sits on top of these policies, giving you much more coverage. What happens here is this: if you are sued your underlying insurance will pay up to the policy coverage limit. Then, the umbrella policy takes over.
Features of an umbrella policy - An umbrella protects YOU, your relatives and anyone you give permission to use your vehicles or watercraft. - Coverage for legal expenses and court costs, even if the allegations against you are untrue. - Coverage if you serve on a non-profit board of directors. - Coverage if your family holds a wedding at a local park or facility and you are required to sign a contract. - Coverage If you drive a company car. - Coverage If you rent a car.
You can purchase umbrella policy (also called a personal catastrophe liability insurance) at a very reasonable cost. A $1 million policy will cost about $150-200 a year. And it’s not that much more if you want $2 million or more. Umbrellas are not just for wealthy people, they’re for anyone who owns a home or other assets. Let your insurance work on your behalf to help defend you and pay claims, knowing that some lawsuits take years to settle.
Money-Saving Idea - I strongly suggest you purchase an umbrella policy. Perhaps you raise the deductibles on your cars, homes and other insurances to $500 or $1000. You can probably save enough money to pay for the entire umbrella. You may be responsible for minor claims that don’t meet your deductible, but the peace of mind you receive by knowing you have good insurance when a major claim occurs is well worth it.