You?ve probably heard of umbrella insurance policies. Maybe you?ve had questions. What is an umbrella policy? What does it do for me?
Most insurance companies that insure your home and automobile will offer you an umbrella liability policy. The umbrella gives you additional protection in case the limit of your auto or home insurance liability limits are not enough. For example, if you are involved in a car accident and someone is seriously injured, a $250,000 limit may be less than the victim?s attorney demands or jury award. The umbrella policy provides additional coverage above and beyond the standard limit. Typically, a minimum umbrella policy will provide an additional $1,000,000 level of coverage, but larger amounts are available, usually up to $10,000,000.
Without the umbrella coverage in place, once the liability limit of your policy is reached, you are on your own for any additional monies owed to injured parties. In our example above, your car insurance company would pay the $250,000, or whatever the Bodily Injury Liability limit is you?ve purchased. If the final settlement on the claim is $300,000, you would owe the additional $50,000 from your own pocket. If the financial award for the claim is $1,000,000, your insurance company is still only going to pay $250,000, and now you have to come up with another $750,000! If you?ve purchased a Bodily Injury limit lower than $250,000, you are responsible for even a greater amount.
With a one million dollar umbrella policy in place, you would have (for example) a total limit of $1,250,000 liability coverage available and would not have had to come up with any money out of pocket.
It is often overlooked, but legal fees are included in these costs. Your insurance company would represent you in the case. Your insurance company becomes your defense attorney and the legal fees are paid for by your policy. If demands are made for an amount higher than your policy limit, you may have to hire your own attorney at your own expense to represent you for the money they are seeking beyond your policy limits. Once the policy limit is reached, the insurance company?s obligation to represent you also ends, and any additional legal fees incurred are now your responsibility. With an umbrella policy in place, once your liability under your home or auto policy is exhausted, the additional umbrella coverage kicks in, and you and your legal fees are still covered.
Your homeowner?s liability may be only $500,000, or even less in many cases. Someone could be injured on your property. Your dog may bite someone. A child may accidentally drown in your pool or a pond. You could hit someone in the head with a golf ball on a golf course. The potential liabilities are endless?it would be difficult to list all of the situations you may be sued for. But if a jury awards more than $500,000?or whatever your policy?s limit is?the rest is up to you to pay!
Some umbrella policies also provide additional coverage for things like volunteer activities, or worldwide coverage that is not usually included in standard liability insurance.
Most umbrella policies also include an option to extend the uninsured and underinsured motorist coverage of your auto policy in addition to extending the liability coverage. This is extremely important when traveling in other countries outside of the US and Canada. This also protects you for injuries occurring as a pedestrian if you?re hit by a vehicle while on a European vacation.
And umbrella policies are very economical, usually only a few hundred dollars per year.
The chances of being the subject of a lawsuit are greater than ever, and the more you own or have the potential to earn, the more you have to lose. A jury?s judgment can even take away future earnings, savings, and the equity in your home. Don?t risk all that you?ve worked for: make sure you?re adequately covered. Contact American Advantage Insurance today about adding an umbrella policy to your insurance program.
Source: http://insurancewisconsin.biz/575
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