You have heard the old adage advising to “save for a rainy day.” Another weather-related saying is “when it rains, it pours.” Both beg the question of whether you have an umbrella or not. In this case, we are talking about an umbrella policy, and nothing is as welcome during a liability downpour than an umbrella.
Your insurance coverage is only as broad as your policy limits. For example, if you have 100/300/50 limits on your auto insurance, you are covered for $100k per person up to $300k per occurrence with $50k in property damage. You may want to have an extra layer of liability protection. That’s what a personal umbrella liability policy provides. An umbrella policy kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. It will also cover you for things such as libel and slander, according to the Insurance Information Institute (www.iii.org).
Here are a few scenarios you may want to read when considering whether to purchase umbrella coverage. A $1.2 million in New Jersey where an underinsured driver hit a policeman who was completing paperwork at a traffic stop. The driver had to pay legal fees for his defense as well as the settlement. $1.76 million was awarded to a mother and her 8-year-old child in Florida after a wave runner accident injured both of them. The mother needed corrective surgery after the initial injuries were treated. How much is your 100/300/50 policy going to cover?
Remember that liability claims are not limited to your auto insurance. Homeowners and renters are also at risk. Someone slips and falls in your home, a tree on your property falls and caves in half of the neighbor’s house, or a fire in your apartment spreads to adjoining units. What then?
The first thing you should do is look at your current coverages, all of them. What are you protected for now and what should you anticipate for the future? Of course the best way to answer these and other questions is by meeting with your insurance professional. Don’t put your livelihood at risk, not to mention your retirement.