Hard-working individuals are frequently focused on building assets, but the wisest also have a plan to protect the assets they already have. Umbrella insurance covers financial liability in excess of other insurance policies and in certain other otherwise uninsurable situations. It allows individuals to protect themselves from a variety of unforeseeable situations where their assets would otherwise be at risk. Many policies will also include the services of an attorney to help you defend against the liability before it is incurred.
The most frequent example of use of an umbrella policy is in defending against personal liability for a car accident. The individual’s automobile insurance would certainly help defend and cover the individual’s liability to the automobile policy limits, but the risk to the individual is that liability is in excess of the automobile policy’s limits. The umbrella company may assist the automobile insurance company in defending against liability as well as pay any obligations over the automobile insurance, up to the umbrella policy limits.
Other situations when one may benefit from an umbrella policy include situations where other insurance, such as home owners or automobile, is not available. For example, a lawsuit arising from volunteer work is likely not covered by any other insurance an individual may have.
An umbrella policy is not just for those with a high net worth. Anyone with retirement accounts or regular income should consider umbrella insurance. Wage garnishments and access to retirement account assets are frequently pursued to satisfy payment of liability from litigation. Future earnings, not just presently existing assets, could be at risk.
Umbrella policies are available in many forms and vary according to local law and regulation. Policies will vary on premiums, policy payout limits, and types of liabilities that are covered. Many policies will require other policies, such as home owners insurance or automobile insurance, meet minimum coverage amounts in order to minimize risk of needing the umbrella coverage. It is important for your insurance professional to understand an individual’s risk profile and circumstances to make the best recommendation for coverage.