Lawsuits are in the headlines every day, and it seems no one is immune to them. It is not just businesses and the ultra-wealthy who are sued; anyone can be the subject of litigation, and virtually everyone has something to lose. Whether you are hit with a liability lawsuit just out of college or once you’ve reached your retirement years, a single judgment and court costs could cost you years of hard-earned income and assets, both present and future. To preserve your future income and nest egg, talk to an independent agent at Burstad Insurance about personal umbrella insurance and how it could protect you against financial devastation.
What is Umbrella Insurance?
Umbrella insurance is stand-alone liability protection that supplements your primary liability coverage. It usually has very high limits of protection – often $1 million or more. The coverage is flexible, adding to the protection you receive through your auto, homeowners, renters, and boat insurance. After you exhaust the liability limits of these policies, umbrella insurance helps cover the excess damages and costs, up to the limitations of your coverage. Furthermore, because personal umbrella insurance is secondary protection, it generally presents inexpensive premiums that are quite affordable for the average household.
In some cases, umbrella insurance assumes the role of primary coverage when there is no liability coverage available from another policy. This coverage is typically limited to certain types of damages, such as those caused by accusations of:
- Libel
- Slander
- Defamation
- Rental damages
- Landlord liability
- Travel-related liability
- And more
What to Expect from Umbrella Insurance
Though we hope you never need to file a claim, the following is an example of how umbrella insurance might work in real life:
Your 16-year old daughter is looking after your niece and nephew in the upstairs of your home. She places the infant in a rolling walker while she puts a puzzle together with the preschooler. In just seconds, the infant takes a tumble down the stairs, sustaining severe, life-threatening injuries. The child’s parents sue you for medical bills, caretaking expenses, lost wages, pain and suffering, and more. Your medical payments coverage and $250,000 homeowners liability coverage only pay a quarter of the damages, leaving you with $750,000 in additional liability. Thanks to your umbrella policy, the additional damages are covered in addition to your court costs.
Had you not purchased umbrella insurance, the family could have pursued your personal income and assets for the remaining damages, resulting in liquidations and potential wage garnishment. It also could have derailed your plans for the future, whether for your teen’s college education, the down payment on a vacation home, or even your personal retirement.
General Exclusions
Umbrella insurance policies usually include supplemental and primary liability coverage for several different types of losses. In addition to paying your legal fees if you are sued, it can also cover damages related to third-party injuries or financial losses. However, there are certain events that are excluded from coverage. Examples include your own personal losses and injuries due to a covered event, as well as the damages you are liable for due to a willful, intentional, and/or illegal act. For help understanding which types of liabilities are covered and which ones are excluded, contact our office to speak with an independent agent today.
Do You Need Umbrella Insurance? Probably.
Umbrella insurance can be one of the most beneficial types of insurance protection, yet it is often the most under-utilized and lesser known coverage available to individuals. Those who have heard of umbrella insurance may assume it is for wealthy individuals who need to protect millions of dollars worth of assets. In reality, middle-class, working families often benefit from personal umbrella insurance, too. Just one major lawsuit can wipe out a lifetime of savings or otherwise reduce a person’s ability to earn and save for the future. Could you afford to build or rebuild your nest egg if you suddenly faced a seven-figure liability judgment?
Before you make a decision about liability insurance, consider that your coverage needs do not only concern your current net worth, but also your ability to accumulate financial assets in the future. We typically recommend umbrella insurance to individuals who:
- Plan to work and earn income in the future
- Expect to receive a significant inheritance or windfall
- Have accumulated significant savings and assets
- Travel internationally
- Plan to pay for a major expense, such as a child’s college tuition
- Own rental properties
- Own high-risk assets, such as a dog, pool, or trampoline
- And more
Selecting Your Coverage
No matter what stage of life you are in or how wealthy you are, chances are you could benefit from adding an umbrella policy to your insurance portfolio. These affordable policies typically provide $1-2 million of coverage for less than the cost of dinner for two each month. It is even more affordable for each additional million dollars in protection you add – little more than the cost of a latte each month.
Shopping and applying for coverage is simple and easy when you use an independent agent at Burstad Insurance. Insurers typically require a minimum amount of coverage before issuing umbrella insurance, so we can help you review your primary liability limits to ensure they meet the standards of your insurer. We can then compare rates and coverage to help you find the policy you need at a competitive price.
For more information about umbrella insurance for Central and Western Wisconsin residents, contact our office today. We look forward to serving you soon.
