Do I need umbrella protection?
If you are ever involved in a serious crash or injury case, umbrella coverage is a lifesaver.
Pacific Northwesterners are definitely familiar with umbrellas, but what about umbrella insurance? Far too many people overlook this coverage, which I consider one of the most important types of protection.
1. What is umbrella insurance?
Sometimes called excess liability insurance or personal liability insurance, this coverage really does act like an umbrella, offering an extra layer of coverage above and beyond your car insurance and homeowners insurance policies. If you injure someone or damage their property and the losses you’re responsible for exceed your other policies, you can tap the added coverage of your umbrella policy.
2. Why is umbrella insurance important?
Auto and home policies commonly carry $100,000 to $300,000 in property and injury coverage. This may sound excessive, given that the average car crash or injury claim may only result in tens of thousands of dollars in damages. But the main purpose of insurance is to keep us protected when big, life-changing events could jeopardize our financial wellbeing. Serious car crashes or injuries that occur at your home — and the resulting litigation – can exhaust or exceed a standard policy’s coverage.
3. Who needs umbrella insurance?
Anyone with significant assets (a home, investments or savings) needs umbrella coverage, but those without such assets can also benefit. This is because judgments in a lawsuit will often take future earning potential into account, so your wages could be garnished for decades to pay off damages. Whether it’s coaching youth sports, skiing or owning a pool, any activity or possession that increases your risk of being sued also increases your need for umbrella coverage.
I’ve heard too many stories over the years of members who turned down umbrella coverage and later regretted it. After a traumatic event, they had to worry about their financial future instead of just getting better. On the other hand, I’ve also seen members who purchased umbrella coverage that saved the day when they needed it most.