You buy insurance and stash away cash just in case of a rainy day, but what happens when your preparation isn’t enough to cover the damages? If you are sued, you could face hundreds of thousands or even millions of dollars in legal fees, judgments, and settlements – damages your primary liability insurance may not be capable of covering in full. Umbrella insurance allows you to call for back-up, providing supplemental liability protection above and beyond the limits of your primary coverage. At Binford Insurance, we can help you establish a personal umbrella for your family to better protect your income and assets both now and in the future.
Understanding Umbrella Coverage
An umbrella policy is not a ‘catch-all’ insurance policy for insurance you do not have. Instead, it is additional liability insurance that effectively extends the limits of your existing homeowners, auto, boat, and certain other insurance lines, often by a million dollars or more. If you are sued, your primary insurance takes center stage, paying for damages up to the limits of your policy. Once you exhaust your basic coverage, umbrella insurance can pay for the remaining damages (up to the limits of your policy), sparing you the out-of-pocket expense.
Generally, umbrella insurance covers bodily injury and property damage liability, as well as legal fees. However, there are instances where umbrella insurance is the first-line of protection, as there are certain coverage types included in a typical umbrella policy that may not be available as stand-alone insurance or a pre-requisite for coverage. For example, your umbrella insurance could provide protection against accusations of libel, slander, and defamation. It could also cover the damages you cause to a boat you rent while traveling abroad, or it could take care of potential liability you incur as a landlord.
Examples
The circumstances surrounding umbrella insurance claims are often extreme and involve significant property damage, injury, or even loss of life. Though it may seem unlikely that you would face such a scenario, these types of events happen virtually every day. In real life, it could look something like this:
- Another driver and passenger are killed in an accident for which you are at fault
- Your teenager makes defamatory statements about a student or teacher at school
- Your dog attacks a neighbor’s toddler, resulting in life-altering trauma
- A tree in your front yard falls over onto a passing car
- An intoxicated guest leaves your house and causes an accident on the way home
In all of these scenarios, the legal fees and damages can total much more than the limits on your homeowners, auto, or other insurance coverage. If a judge orders you liable for $1 million in damages for a car accident, umbrella insurance can pay the remaining $750,000 when your auto insurance only covers $250,000. Imagine having to pay for those damages out of pocket instead. In this type of situation, having an umbrella policy could mean the difference between preserving your financial future and facing total financial devastation.
Exclusions
There are certain losses not covered by umbrella insurance. For example, umbrella insurance is only designed to cover third-party damages – not your own losses. Also, your insurer may deny coverage for a claim if you lower the liability limits on your primary insurance policy prior to an accident. In addition, umbrella insurance is unlikely to protect you against damages caused by intentional, malicious, and/or illegal acts. For more information about coverage exclusions, talk with your independent agent.
Who Needs an Umbrella Policy?
Umbrella insurance is not just for the rich. In fact, supplemental liability insurance can provide benefits to virtually anyone who has accumulated savings and investments or who plans to generate income for years to come. All it takes is one major lawsuit to wipe out decades of saving and rob you of your dreams for the future. Even if you are just getting started in your career with no money in the bank, you could face years of wage garnishment to settle unpaid debts from a lawsuit judgment or settlement. An umbrella policy is an affordable and easy way to shield your household against financial devastation.
We recommend talking with an independent agent about umbrella insurance before making a decision about your coverage. Even the highest standard liability limits on your Indiana homeowners and auto insurance are likely unable to stand up against a million-dollar lawsuit. By consulting with an agent, you can better understand what could be at stake, from your current net worth to your future retirement. Generally, umbrella insurance is recommended for people who:
- Have accumulated savings and assets
- Plan to earn and save income in the future
- Own rental properties
- Travel abroad
- Are saving for a major expense, such as a second home
- Will receive an inheritance
- And more
Request Your Indiana Umbrella Insurance Quote
Insurance plays an important role in your family’s financial security. Purchasing the right insurance is essential, and we here at Binford Insurance are ready to help. Whether you are fresh out of grad school or inching close to retirement, an umbrella can help you protect your livelihood and the goals you are working hard to achieve.
Coverage usually starts at $1 million, although some insurers may offer as much as $5 million in supplemental liability protection or more. It is generally very affordable, usually starting between $150-300 per year – or about the price of a movie ticket or two each month. That is a small price to pay for peace of mind.
At Binford Insurance, we can shop and compare rates on the coverage you need to find a policy that provides value and savings. As an independent agency, we work with multiple insurers to provide multiple options to our customers. For more information about personal umbrella insurance or to request your free quote, contact our office today.
