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Umbrella Insurance Will Protect Your Assets

All that it takes is a distracted second when you’re driving, and in an instant you’re in a serious accident with a pedestrian who had the right-of-way. At this point in time, it’s impossible to figure out how much money you’re going to be paying out on a claim, but you’re riding on a $300,000 per person and $500,000 per occurrence liability policy.

When your agent tells you that you have umbrella coverage for an extra $1 million beyond your underlying policy limits, you’re surprised. Your agent took good care of you by recommending this low cost add-on and now it looks like you’re going to need it.

What’s umbrella coverage?

An umbrella policy gives you additional excess coverage above and beyond your underlying policy limits for liability on your autos and home. If that pedestrian ends up hospitalized for six weeks, it’s highly likely that the hospital and medical bills along with other damages will be in excess of $300,000. In that event, when the underlying $300,000 policy limit is exhausted, your $1 million umbrella excess coverage is triggered.

An umbrella provides asset protection

In our fact scenario, if you didn’t have umbrella insurance, everything that you own beyond that initial $300,000 can be put at risk. A judgment for $900,000 would leave a $600,000 deficiency. You’re likely to be throwing your assets up to the mercy of the bankruptcy court. Your umbrella policy is covering that excess though.

Other coverage it gives you

Umbrella insurance doesn’t only just provide excess coverage for personal injury liability damages. Depending on your insurer it might also cover claims like:

  • Defamation lawsuit
  • False arrest
  • Abuse of process
  • False imprisonment

It’s surprisingly inexpensive

With a good claims history, your umbrella insurance will cost you around $250-$400 for the first $1 million of coverage. Every $1 million increment beyond that will cost about $100.

There’s no reason not to protect your family and assets with umbrella insurance. Assuming that you have your cars and home under one insurer, ask about bundling umbrella insurance into your coverage. It’s likely that applicable discounts will make your umbrella insurance premiums even less.

As you grow older and your career progresses, your assets are going to grow. Think of your future by adding umbrella insurance now.