Do I Need Umbrella Insurance to Protect Myself, My Family or My Assets?
Insurance is the best way to protect yourself from accidents, liability and financial hardship. But as your net worth increases, your insurance policies may not cover enough to keep you fully protected against the costs of damages or litigation. That’s where an umbrella policy steps in to help. But not everyone knows what they are or how they work! It’s not uncommon to hear the question “do I need umbrella insurance?”
If you aren’t sure how an umbrella insurance policy could help you, read on to learn how they work and how one could benefit you and your family.
What Is Umbrella Insurance?
Like any insurance, umbrella insurance is a policy designed to mitigate the monetary costs associated with unexpected or unforeseen problems. Unlike other types of insurance, umbrella insurance doesn’t provide coverage against one specific type of claim.
Health insurance helps mitigate medical expenses, auto insurance protects you from vehicle-related damages, but umbrella insurance provides additional financial protection when the limits of your other policies are too low to cover damages for which you are liable.
Additional Coverage from Umbrella Insurance
So, what type of coverage does umbrella insurance provide?
Auto insurance often covers the costs of property damage associated with an auto accident. If you drive off the road and into someone’s home, you may cause damage that exceeds the maximum amount your auto insurance will pay out. Without umbrella insurance, you would be left to cover any costs over the maximum on your own. An umbrella insurance policy would cover those costs.
When asking yourself, “do I need umbrella insurance,” keep in mind it can also covers costs not covered under homeowners or auto insurance policies. If your child accidentally destroys a nearly priceless antique at the store, an umbrella insurance policy can help cover those costs as well.
In the same way it supplements property damage, umbrella policies supplement costs involving bodily harm or injury. Accidents on your property leave you liable – such as someone falling down your stairs. While homeowner’s insurance policies do usually cover these costs, medical expenses can become extreme in certain circumstances. An umbrella policy can prevent excessive medical liabilities from overwhelming you when your homeowner’s insurance coverage hits its maximum.
But that’s not all – do you have a dog? If so, an umbrella insurance policy can be a lifesaver! You’re liable for injuries sustained from your pets when you’re away from the home, such as when you’re out on a walk. An umbrella policy will cover you here, whereas your homeowner’s policy likely will not.
If you’ve ever been involved in litigation, you can appreciate how quickly legal fees begin to stack up. Umbrella policies offer additional benefits to help cover these fees. Court costs, lawyer fees and more are often part of umbrella policies. If you’re concerned about litigation costs, you can speak with us to see how an umbrella policy may help you for future occurrences!
Additional Legal Protections
Lastly, an umbrella policy can come into play to mitigate costs associated with civil charges. If someone sues you, your financial well-being becomes greatly at risk! Without an umbrella policy, your existing insurance policies may not offer coverage or may have limits far below the costs or liabilities you’re legally required to pay.
Why Do I Need an Umbrella Insurance Policy?
Based on the coverage above, the choice is left to you. While certain types of insurance are necessitated by your state government, such as the types of auto insurance coverage, umbrella insurance is always optional.
Consider looking at the limits of your insurance coverage, as well as your risks that are either above those limits or outside of what your policies cover. The most common individuals who find umbrella insurance a no-brainer are business owners, those who are independently wealthy or those with families that want to avoid financial hardships from unexpected damages or liabilities.
If you fall into any of these categories, it behooves you to investigate an umbrella policy to help protect your assets and family. Look at the costs associated with the coverage options available to you. In most cases, you’ll be able to get a policy starting around one million dollars, for just a few extra hundred dollars a year. The cost-to-coverage ratio works out immensely in your favor!
The higher your net worth, the more important an umbrella policy is to you. However, if it’s within financial power to comfortably afford the extra policy on your insurance, it benefits anyone. You never know when you may find yourself liable for damages that exceed your coverage, or when unique legal circumstances may arise.
Can I Just Get an Umbrella Insurance Policy to Cover Everything?
Now that you know how wide-ranging the protections of an umbrella policy can be, you may think it makes sense to simply establish an umbrella policy and ditch your other insurance. However, umbrella policies are a unique type of supplemental insurance.
Umbrella insurance payouts only come into effect after your initial insurance policies reach their limits. Therefore, it can’t be purchased as a “catch-all” without other insurance protections.
Fortunately, the costs of umbrella insurance policies are significantly lower relative to how much they cover. Umbrella policies can protect you against millions of dollars in damages while requiring lower yearly premiums, due to the expectation that your primary insurance will cover most incidents.
Are There Things Not Covered by an Umbrella Insurance Policy?
It may sound like an umbrella policy is the perfect catch-all for anything beyond your base insurance. However, there are some things an umbrella policy won’t cover, and they’re important to note:
Punitive Damages – While umbrella policies can cover many types of legal fees or costs, they don’t cover punitive damages awarded by a judge or jury. These specific types of damages are designed to be appropriately punitive, and an umbrella policy would undermine that punishment.
Board of Director Liability – If you’re a member or chairman of a board of directors, your umbrella policy may not offer you coverage. There are sometimes exceptions, such as boards that run non-profit organizations or where you receive no compensation for your service.
Criminal or Intentional Acts – If you intentionally set out to harm someone or perform an illegal act that leaves you liable for damages, your umbrella policy usually won’t protect you.
Contact Iott Insurance for a Quote Today
Iott Insurance has been a part of southeast Michigan for over 50 years. We can help you plan your insurance needs and find you the right policies or plans to protect you.
Or you can visit one of our three offices in southeast Michigan:
Blissfield, MI – (517) 486-4381
Lambertville, MI – (734) 854-4688
Petersburg, MI – (734) 279-2111
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