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Umbrellas Are Not Just for Rainy Days Anymore

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One of the most important insurance policies you can buy is the personal umbrella policy, but many people are unaware they need one. Consider that lawsuits happen every day and if you were sued, would you have enough money to cover your attorney's fees and possible judgments? Most homeowner's and automobile policies offer certain protections to cover legal liability, but is it enough? If you are concerned about your ability to cover all the possible expenses of a lawsuit, you should consider purchasing an umbrella policy. This insurance policy will cover you if you cause bodily injury, property damage or personal injury to another party.

Umbrella policies also offer protections that traditional homeowner's or auto policies do not cover, including false arrest; libel or slander; invasion of privacy; wrongful entry; eviction and more. While an umbrella policy offers additional protection, there are still claims that are not covered. For example, if you own a business, only a business insurance policy will cover general liability claims. Most umbrella policies do not cover punitive damages. Additionally, some umbrella policies are only available to policyholders who carry both their homeowner's and auto insurance policies through the same insurance carrier.

Since umbrella policies are tapped only after the liability limits from your homeowner's or automobile policies are exceeded; they are usually quite inexpensive. A policy with a million dollar limit can usually be obtained for $200-300 dollars per year.

Personal umbrella policies are growing in popularity. In the past, only wealthy individuals and families purchased this coverage. Today, middle-income families also may procure this policy for protection in our society's increasingly litigious climate. As the tendency to sue for damages rises and awards granted by the courts grow, the personal umbrella policy is increasingly seen as an insurance necessity rather than a
luxury.

In particular, you should consider purchasing a personal umbrella policy if you have certain characteristics or engage in certain activities, including the following:

  • Your total assets are greater than your underlying liability limits.
  • You are financially responsible for the actions of a young, inexperienced driver.
  • You live in an exclusive and affluent neighborhood.
  • You have a high profile career or high income.
  • You frequently host guests on your property.
  • Your residence includes a swimming pool.
  • You own waterfront property, a farm, or a ranch.
  • You own watercraft, aircraft, or off-road vehicles.
  • You own numerous rental properties.
  • You engage in extensive international travel for pleasure.

Click here to return to Amity Insurance E-Newsletter May 1, 2012.