What is an "Umbrella Policy" and Why do I Need One?
When it comes to liability insurance, you may think you know it all, but there might be one more step towards ensuring you and your loved ones have the ultimate protection in case of trouble…
An umbrella policy.
Umbrella policies, also commonly known as personal liability policies, are one way to prepare for nearly any insurance issue. Umbrella policies act as an extra cushion for the underlying liability policies you already have in place. These policies provide coverage for costs exceeding the limits of and claims outside of your current insurance policies’ reach.
You may be wondering, “Isn’t this just regular excess liability insurance?”
And the answer is almost. An umbrella policy is similar to excess liability insurance in the fact that they each kick in to cover additional costs once your initial insurance policy is exceeded. Both act as a sort of insurance for your initial insurance policy.
A key difference is that an umbrella policy goes a step further, acting as protection for multiple policies. Umbrella policies, unlike excess liability insurance policies, can also cover additional claims not protected in your original insurance policies.
Umbrella policies go above and beyond, protecting you in cases of damages and costs exceeding your average realm of coverage. Umbrella policies can cover property damage and legal fees, among many other costs.
These policies can pick up the slack in case of a perfect storm of claims.
For example, imagine you are getting work done on your roof, and in the process of carrying supplies from their van to your home, your contractor trips and falls on that pesky step you haven’t been able to get fixed quite yet. The contractor sustains a serious arm injury from the fall, is subsequently out of work for 12 weeks, and sues you for lost wages. While your homeowners’ insurance may cover a portion of the contractor’s medical fees, you are still responsible for an exorbitant amount of money covering wages and legal fees. An umbrella policy could help cover any remaining costs from both the accident and the following legal proceedings.
If you own a rental property or small business, have teen drivers on your insurance, possess significant assets, or feel for any reason you may be in a position to be sued, an umbrella policy may be necessary for you.
And if you’re not sure, it never hurts to ask a professional!
These policies are often comparably inexpensive for the amount of protection they offer. Many of the examples you’ll find explaining the value of umbrella policies can seem far-fetched and unlikely to ever actually happen. “Especially not to me,” you may think. But the truth of the matter is, life is unpredictable! We never truly know what is around the next corner, so it is important to take any possible precautions.
Contact Gretchen Rehm Financial for your insurance needs. We’d be happy to set-up an appointment to evaluate your current coverage and help you identify any potential gaps.
