Umbrella Policy

Having insurance for your home is great to provide a minimal level of protection from many types of disaster or issues that can happen on and around your property, but there may be times - and they're not really that common - when your insurance policy is not going to be sufficient to provide enough reimbursement for a loss that you may suffer. One of the most common examples of your homeowner's or auto plan being insufficient to protect you is in the eventuality of a lawsuit. Many people who get into auto accidents also find themselves slapped with a lawsuit on top of what their insurance paid for, or if a worker slips and falls on your property, they can file suit on you and very easily surpass the coverage provided by your agreement.

Another common place where an umbrella policy can come into play is if you operate a business out of your home and have employees coming and going to your house. Your regular homeowners plan will not provide any coverage for accidents that may happen to your employees while they are on your property. An umbrella plan would provide protection, however, with levels and limits specified by you.

Your homeowners agreement will provide some minimal liability insurance coverage that can be used to help settle a legal claim, but if you only have a $400,000 plan and a judgment in court against you comes up to $800,000, you will be personally responsible for coming up with that other $400,000 out of your own pocket, including, if necessary the selling of the very home where the accident took place in order to settle that debt. Avoiding this kind of tragic situation is where such an option would come into play.

Lots of Coverage - Low Price

Umbrella life insurance policies pay $1 million, $2 million, and possibly up to $5 million of a claim over and beyond what your basic homeowners or auto insurance policies will pay for a single event. Premiums for umbrella polices are not usually all that expensive - less than $300 per year for a $1 million dollar plan in most cases. These policies provide protection for you and your loved ones that, if nothing else, will provide you with an inexpensive peace of mind.

The lower expense of your typical umbrella polices when compared to your homeowners or auto insurance policies is due to the rarity of their actually being needed or used. Since your agreement will only provide protection after your regular plan has paid out its maximum, the number of incidents where it will actually be called into play is quite rare. Those times, however, when your regular homeowners or auto insurance offering do reach their maximum limits, and you wind up needing the protection provided by an umbrella plan, make it a true lifesaver, protecting your assets and your financial future from possible ruin. Given America's love affair with the lawsuit, an umbrella plan is probably a good idea to have if you have significant assets that you want to protect.