Many people wonder, “Is umbrella insurance worth it?” A case can be made that just about everyone can benefit from umbrella insurance.
An umbrella insurance policy is extra liability coverage that exceeds the limits of your typical home and auto policies. Its main purposes are to protect your assets and to provide extra security should you be at risk for being sued for causing damage to someone’s property or injury in a personal liability situation. And as an extra benefit to you, if you add umbrella coverage to your existing home/auto policy, you may be eligible for a discount which would further reduce your auto and home insurance premiums.
Let’s look at some instances where umbrella insurance would pick up where your other coverage leaves off:
Auto Example:
It’s determined by a court that you’re liable for causing a car accident with multiple vehicles, and the cost to cover the damages and injuries is $850,000. However, the liability limit on your auto policy is only $300,000. In this case, your insurance would pay only $300,000 for the entire accident, and you’d be responsible for the remaining $550,000 out of your own pocket!
With an umbrella policy, however, you could extend your liability limits beyond the maximum provided by your underlying policies. In this case, an umbrella policy would provide liability limits above the $300,000 limit of your auto policy, up to the limit you choose for your umbrella policy (typically anywhere from $1 million to $5 million in coverage).
In other words, you wouldn’t be left paying the remaining $550,000.
Homeowners Example:
Let’s say your homeowner’s insurance has a personal liability limit of $300,000. 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 she decides to sue you. In court, the jury sides with your party guest and awards her a judgment of $1 million. This judgment is $700,000 higher than your homeowner’s insurance liability limit. Remember, think of umbrella insurance as a fail-safe for your savings and other assets.
Other scenarios umbrella insurance may cover include:
- Your dog bites a neighbor’s child.
- A fire at your condominium spreads to other units.
- An accident occurs at your rental property.
One costly incident like those listed above that exhausts your auto or home policy could result in financial ruin. For a relatively low annual rate you can get a significant umbrella policy to protect you, your family, and your assets. Contact Gnade today and talk to one of our knowledgeable insurance agents to find the best insurance coverage for you.
This blog was written by Gnade Insurance Group and West Bend Mutual Insurance Company.