3 Reasons an Umbrella Policy is Great for a Rainy Day
An umbrella insurance policy supplements your basic home and auto liability insurance policies. Its limit is much higher, up to $5 million, and protects your assets if you are held responsible in a lawsuit for damages or bodily injuries. It will cover your liability costs and also your legal fees.
You may be wondering if umbrella insurance is something you should consider purchasing. Following are three reasons why an umbrella policy is great to have for a rainy day.
Reason #1: Your Net Worth Is More Than the Limit on Your Home or Auto Insurance
When you calculate the worth of your cash, retirement savings, home, vehicles, and other assets, do they add up to more than the limit on your home or auto insurance? If so, purchasing umbrella insurance is a good idea since your assets will be safe if you are involved in a disaster or lawsuit. Also, your coverage will afford you better legal representation than you may have gotten otherwise.
Reason #2: You’re at Risk for Having a Lawsuit Filed Against You
Anyone can have a lawsuit filed against them when the cause of an auto accident or an injury at your home is deemed to be your fault. However, you are most at risk if you:
- Drive a long commute during rush hour
- Have teenage drivers
- Own a swimming pool or trampoline
- Own a certain breed of dog
- Frequently have house guests.
- Hire people to work in or around your home such as a gardener or childcare professional
- Own a residential farm
- Hold a high position at work or have a highly visible occupation such as attorney, doctor, or accountant
- Hold a public office or have a high profile in the community
If you have one or more of the above risk factors, purchasing umbrella insurance is recommended.
Reason #3: You Own a Rental Property
Umbrella insurance will protect you as a landlord if a third party sues you. A lawsuit could be filed against you if damages were caused by your tenants, if a visitor is injured due to a lapse in property maintenance, if a guest is injured in your gym or pool facilities, or if you don’t change the locks between tenants and a burglary occurs.
Getting an Umbrella Policy is Easy and Affordable
As long as you already have the highest limits on your home and auto insurance policies, getting an umbrella policy is easy and affordable.
The cost for $1 million worth of coverage (the minimum amount possible and the maximum amount to consider if you aren’t at high risk) is between $200 and $350 annually. Each additional million dollars worth of coverage is approximately $100 more per year. Typically, $5 million is the maximum coverage amount you can purchase.