Do I need an umbrella policy, you might ask? Keep reading and I will do my best to explain in laymen’s terms the importance of having this valuable coverage.
What is an Umbrella policy?
An umbrella policy is an excess policy that provides you with liability coverage beyond the limits of your homeowners and auto policies. For example, if you have $250,000.00 of liability coverage on your auto policy and a $1 million umbrella policy, you will have a total of $1.25 million in liability coverage.
Consider this scenario. Let's say you cause an accident, get sued for $800,000.00 and the court orders you to pay the injured party $800,000.00. You only have $250,000.00 in liability protection, leaving a balance of $550,000.00 owed to the injured party. The insurance company will pay the $250,000.00, and you will have to pay rest. If you have an umbrella policy in force, it will pay the difference up to the policy limit.
Do I need an Umbrella policy?
I recommend a $1 million umbrella policy to anyone with assets and money to protect. You don't have to have a million dollars in assets to get a million-dollar umbrella. If you only have $100,000.00 in assets, you still want to protect that money. Using the same scenario as above, the injured party sues you for $550,000.00 which you don't have; but you have $100,000.00 in savings. You will be required to pay that $100,000 to the injured party, reducing your savings to $0. Even if you have no money in the bank but you earn $100,000 a year, I recommend protecting yourself from a lawsuit against your future earnings. Though this situation is not common in Texas as there are many laws to protect us, I personally would not and do not expect the current laws to always protect me.
Insurance is money - not money in the bank exactly- but money that protects your money. Umbrella coverage is very inexpensive, starting at less than $175 a year.
Don't think it can't happen to you! I have seen many million-dollar payouts during my ten years of claims experience and many verdicts in excess of customers’ policies. Call me today if you think you may need the extra layer of protection. I will help you evaluate the risk and determine how much coverage you need to protect you against the unforeseen.