Protect Your Assets with Umbrella Insurance
You probably have auto, homeowners, or life insurance. However, you might be missing an important type of coverage: umbrella insurance. This supplemental policy can safeguard your finances under specific, often critical, circumstances.
What Is Umbrella Insurance?
Umbrella insurance, also called excess or personal liability insurance, enhances your existing policies, such as auto or homeowners insurance. It provides additional coverage when the liability limits of your other policies are exceeded. For example, it can cover legal fees, damages from lawsuits, and even less common scenarios like libel or slander.
This type of insurance helps protect your assets and future income. It guards against the financial impact of unexpected accidents or claims.
Why Is It Important?
Umbrella insurance acts as a safety net for your financial security. Consider your assets—homes, cars, savings, and even future income. A major lawsuit or liability claim exceeding your regular insurance limits could leave you vulnerable to significant financial loss.
Standard policies can cover common incidents. However, they may not protect you from lawsuits. This includes lawsuits from serious car accidents, social media disputes, or other unexpected events. Umbrella insurance fills these gaps, offering higher coverage limits and broader protection.
What Does It Cover?
Umbrella policies generally include:
● Bodily injury liability: This covers medical bills and claims for injuries. It includes injuries from car accidents or falls on your property.
● Property damage liability: Protects against costs for damages to others’ property, like vehicles or homes.
● Other personal liabilities: Includes protection against slander, libel, false arrest, and legal fees.
Is It Affordable?
Umbrella insurance is surprisingly affordable, often costing $300–$500 annually for $1 million in coverage. Additional million-dollar increments usually come at a lower cost. Discounts may be available if bundled with your other policies, such as auto or homeowners insurance.
Most insurers need a minimum liability coverage on your main policies. This is usually $250,000 for auto insurance and $300,000 for homeowners insurance. You must have this coverage before they issue an umbrella policy.
How Much Coverage Do You Need?
To determine your coverage needs, consider:
● Your assets: Protect the total value of your taxable assets.
● Your risks: Assess your liability exposure, such as owning property, commuting, or engaging in activities with potential risks.
● Future income: Shield your earning potential from liability claims.
Additional Protection Options
If you serve on a board or work for yourself, you may need Directors and Officers (D&O) insurance. You might also need Errors and Omissions (E&O) insurance. Some umbrella policies include these options.
Plan Ahead
Your hard-earned assets and income deserve robust protection. Umbrella insurance provides an extra layer of security, ensuring you’re prepared for life’s unexpected challenges. Talk to your insurance provider or financial advisor today. They can help you see how this affordable coverage can protect your financial future.
Sources:
https://www.fidelity.com/viewpoints/wealth-management/do-you-need-umbrella-insurance
Disclosure:
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
Advisory Services Network, LLC does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.
