What is personal liability umbrella insurance?
Your basic homeowners and auto insurance likely provides minimal to substantial liability insurance. Yet, in the event of a third-party lawsuit, your basic insurance plan may not cover exorbitant lawsuit fees. Liability umbrella insurance is a highly economical method to protect you from large, third-party lawsuits. Personal liability umbrella insurance is designed to help in two areas: (1) it increases the liability protection beyond the homeowner’s or auto policy and (2) it fills in the gaps of the already existing insurance plan to fit the owner’s needs since the average policy doesn’t include numerous types of liability exposure. Umbrella insurance starts working once the liability on your regular insurance plan runs out.
How do I know if I need it?
Previous recommendations for personal liability umbrella insurance would have been for wealthy individuals who place themselves in high-risk environments where they are likely to come across a lawsuit. However, in today’s society, we live in a very litigious environment and lawsuits are becoming the norm. Many feel the need to protect their assets with umbrella insurance plans. Where extra insurance coverage used to be a luxury, many now feel it is a necessity. Determine the worth of your assets and then use your best judgment to whether or not you are in a high-risk environment facing lawsuits.
What coverage is typically provided?
Personal liability umbrella insurance contracts vary greatly. Many policies allow buyers to pick the additional sections of coverage needed for their situation. A few examples of protection that are not typically included in average homeowners insurance consist of: defamation of character, libel, slander, invasion of rights of privacy, false arrest, mental anguish, wrongful conviction and several others.
On top of that, many feel the need for additional coverage for their auto and recreational vehicle insurance. Accidents can happen everyday and sometimes the results are out of our hands. Additional protection is always a nice cushion to protect yourself from unpredictable accidents that could result in a lawsuit. But personal umbrella policies can bring in anywhere from $1 million to $100 million in coverage. Additional feature are sometimes offered by plans to cover areas that are not commonly protected. Slander is one of the lawsuits that fit this category.
How much insurance should I buy?
To figure the amount of personal liability umbrella insurance you should buy; first figure the amount your net assets are worth. Next, determine the level of risk for which you are exposed (i.e. swimming pool, high-risk vehicles). Finally, determine your prominence in the community and the likelihood of coming across a lawsuit.
Insurance premiums for personal liability umbrella insurance can be anywhere from $200 to 400 a year for around $1 million in coverage, varying with your insurance plan.
It is always important to remember that those who are suing you are generally not concerned with your net assets. Umbrella insurance is one of the best method of protection against the wiles of a society consumed with “easy money.”
By Amber Callister