According to the Insurance Information Institute (III), even though most American homeowners carry home insurance, nearly two-thirds lack the coverage they would need if they suffered a major disaster. The solution is to purchase umbrella insurance, which is extra coverage that policyholders can add to extend their traditional insurance plans.
Here are reasons why you should check with your insurer to see if all your items are completely covered and if you could benefit from umbrella insurance.
A Brief Summary of Umbrella Insurance
The essence of an umbrella insurance policy is that it fills gaps in your existing plan for a home, car, or boat. A standard homeowners plan or minimum auto insurance policy only covers liabilities up to certain limits. Suppose you cause a car accident that results in damages exceeding $100,000 on a policy with a coverage limit of $100,000. In that case, it means you will need to pay costs beyond $100,000 out of your own pocket. Umbrella insurance, however, raises limits for specific risks.
Insurance companies tend to sell umbrella coverage in $1 million increments. A typical umbrella plan cost customers between $150 and $250 per year. Many homeowners need $1 million coverage based on location, lifestyle, and other factors. The coverage includes lawsuits, which can run up huge legal fees. Umbrella insurance can be useful for covering significant property damage, serious bodily injury, landlord liability, libel, slander accusations, or wrongful litigation.
Umbrella Liability Insurance
One of the most compelling reasons for getting umbrella liability insurance is if you have several children or throw parties frequently at your home. Anytime a guest visits your property, you are responsible for protecting them from danger. If a person gets injured on your property, it can be a very expensive lawsuit even if you are not directly to blame.
When a guest slips and falls and gets severely injured due to an unlevel walkway, it can mean paying their huge medical bills and repaving the walkway to prevent future accidents. You would have to come up with this money if the damages weren’t already covered by your existing policy. Adding an umbrella plan could prevent this financial fiasco.
Umbrella insurance covers a wide range of high-risk scenarios, such as owning potentially dangerous products like guns or a trampoline. You should further consider the coverage if you own an aggressive dog capable of biting strangers. Even what seems to be a tamer dog can still cause serious damage to a human due to the animal’s sharp teeth. You should also consider umbrella insurance if you are a landlord or have inexperienced teen drivers in your household.
High-profile individuals such as local political leaders should consider umbrella insurance since they can become targets for vandalism. Any person who regularly deals with danger can benefit from an umbrella policy that provides coverage for various types of unforeseen damage.
To get umbrella insurance, you will need to discuss the details of your policy with your insurance agent. The insurer may require that you raise auto liability limits over minimum levels to $500,000 in coverage. When trying to determine if you need this coverage, you should take inventory of your personal possessions and a look at the risks you engage in. Determining your overall net worth (assets minus liabilities) helps establish if you need umbrella insurance.
Umbrella Coverage Limitations
All insurance policies, including umbrella plans, have limits and exclusions. The key is to go over your policy thoroughly with your insurance agent to make sure all your specific valuable possessions are covered. You should be aware that the coverage will not include intentional damage you do to your own property. Getting tired of looking at an old rusty shed and destroying it will not get you a reimbursement check.
The umbrella plan will also not cover criminal activity or if someone contacts an infectious disease on your property. Find out everything the policy covers from your agent so that you can sleep better at night knowing exactly what’s protected in the event of a disaster.
Questioning Your Need for Excessive Coverage
The consequences of not having enough basic or umbrella insurance can be financially devastating. Homeowners whose insurance policies do not completely cover a huge lawsuit can get a lien placed on their home or may have their wages improved. Even your retirement fund can be vulnerable if a plaintiff successfully proves you were responsible for their accident.
If you own a small home and don’t have many valuable possessions, you may not need umbrella insurance. However, keep in mind, even owning a vacant lot can bring you a heavy lawsuit, especially if the public has access to it. Anything that involves danger, such as leasing land for hunting, can present legal problems at some point. Umbrella insurance can be the solution in these situations to avoid paying a settlement worth the value of all your assets.
You should consider umbrella insurance if you own various rental properties or several automobiles used by others. The more tenants and drivers you have to look after opens the door wider for possible litigation. Owning a swimming pool or hot tub can also lead to an expensive lawsuit if someone drowns in it. If you run a home business in which clients regularly visit you, it’s wise to invest in umbrella insurance.
One final factor to think about is social media. Even though many people take for granted the idea of “freedom of expression,” posting something that offends others can lead to litigation.
Umbrella insurance provides an additional safety net to a standard homeowner, auto, or boat policy. Make sure you have sufficient coverage by talking to a friendly expert at Jack Stone Insurance Agency. We serve Antioch, Brentwood, and surrounding cities in California. Contact us today to get started!