You fall asleep at the wheel when driving home and cause an accident that seriously injures several people. You’ve been meaning to fix the deck in your backyard, but a guest walks over it and falls through. In these cases, the injured parties may sue you for amounts above one million US dollars (USD). Your auto insurance will offer you some liability, and will pay only to the amount of liability you posses. Likewise, your homeowner’s policy will pay out at the liability rate you have purchased. In these cases, personal umbrella insurance, sometimes also called personal liability insurance can help you survive a lawsuit without losing everything you own.
Personal umbrella insurance acts as protection once your other policies have been exhausted. In cases where personal umbrella insurance is not purchased, causing an accident can result in your surrender of all your material goods in order to assess their value. Most often the property is assessed is the home you own, cars and boating goods. Other property like jewelry and assets may also be part of the pot a person in a lawsuit can claim. Additionally, a portion of your salary may need to go to any successful claimants for many years, if not for the rest of your life.
Even if a lawsuit does not result in a huge reward, court costs are frequently high and exceed amounts an auto or home insurance will allow. Personal umbrella insurance will also step in to allow for repayment of court costs without your needing to sell assets to meet these costs.
Personal umbrella insurance coverage and costs vary by company. Most require that you carry a defined amount of liability on your car or home policy. If you do not meet this requirement, you will be personally liable for the difference between the liability limit you should have carried and the limit you do carry.
Most personal umbrella insurance policies can insure liability at huge numbers, often starting in the millions USD. Policies can stretch to the multiple millions, and what you own should determine what you purchase. If you have few assets, a personal umbrella insurance policy may actually attract rather than discourage lawsuits. A claimant knows that he or she can get more money out of you as a result of your coverage.
However, with highly valued property, personal umbrella insurance is a must, to avoid losing what you have. The investment on such policies is generally not high, and may translate to about 100 USD a year for 1,000,000 USD in coverage. With lawsuit awards on an upward trend, it’s probably wiser to purchase a personal umbrella insurance policy that can offer you 5,000,000 USD in coverage. Though with fewer assets 1-2,000,000 USD may be sufficient.
