Along with the proverbial inevitability of death and taxes, maybe we Americans should add lawsuits. In 2006, the National Center for States Courts estimated a new lawsuit was filed every 2 seconds. And just a couple minutes ago, the American Justice Partnership’s lawsuit counter showed 5,617,483 so far this year. The vast majority of those suits are frivolous, but if you’re on the receiving end of the lawsuit stick, the cost of defending yourself can mean financial ruin. Personal umbrella insurance (also known as personal liability insurance) can help you from losing everything you own currently or aspire to ever have.
Ah, but you say, ‘I have liability on my auto insurance and homeowners insurance.’ True, those types of policies do afford you some liability coverage, up to the limit of your policy. But if you’re like the average American, you’re probably carry no more than $100,000/$300,000 in bodily injury liability on your auto policy and between $100,000 and $300,000 on your homeowners’ policy. So what happens when somebody slips on your hardwood floor and crashes through a window? Or you lose control of your car, jump a curb and run into a couple pedestrians. You could find yourself being sued for millions, and once the insurance ceiling has been met, the rest will come out of your assets. That could meaning losing your home, car, boat, jewelry, savings, even your future earnings.
Personal umbrella insurance kicks in when the limits of your other policies have been reached. Depending on how the policy is written, it can cover you, your spouse and any family members living in your home. It also extends to legal dependents living anywhere (such as kids away at school). It protects your home, vehicles, investments and wages.
Personal liability policies are typically written with coverage limits of $1 million to $5 million. How big an umbrella you need will depend on the amount of assets you own, the risk associated with your lifestyle and how big a target you represent. Do you have a home pool or spa? Is hunting allowed on your property? Do you have a maid or babysitter working in your home? Are you well known? Did you recently win a lottery or inherit a lot of money or property? All those could indicate a need for increased personal liability coverage.
You can get online quotes for personal umbrella insurance and weigh your risks against the relatively affordable cost of this increasingly necessary coverage.