Five Reasons Why You May Need A Liability Umbrella Policy?

Have you ever wondered if you might need an umbrella policy? What is an umbrella policy designed to protect? What factors should I consider before buying one? The answers to these questions and more are waiting for you inside this article.

As a financial adviser, I often review client insurances for adequacy, cost effectiveness and proper type. One of the most commonly overlooked protections is a personal liability policy or an umbrella. Many people are not quite sure what it is or if they need one.

An Umbrella or personal liability policy is usually an all risk, all peril policy with coverage limits that start at $1,000,000. There are some very specific reasons that you might want to consider purchasing an umbrella and there are also some adjustments that you will want to make to your homeowners and auto insurance if you do.

Reasons To Purchase An Umbrella:

1. Children Driving: One of the simplest reasons to purchase a liability umbrella is if you have young children that are learning to drive or are under age 25. This age drivers are the highest risk drivers for a reason. They are inexperienced, easily distracted (friends, cell phones, texting, etc.) and statistically are involved in more accidents than any other age group. An umbrella policy will cover them all and protect you from losing everything if one of your children happens to cause a serious accident.

2. Assets To Protect: Most homeowner and auto policies have a maximum liability coverage of $500,000. But if you have assets in excess of this amount, you are exposed to a potentially higher liability problem if someone decides to sue you. Maybe you were involved in a car accident or someone slipped on your property, etc. If they sue you for more than the $500,000 and win, it will come out of your pocket or you may have to sell some assets. If your net worth is over this limit, consider purchasing an umbrella policy for the appropriate amount.

3. High Profile Income or Career: Another reason to consider is if you are in a high-profile profession where incomes are typically high. Someone may think that you are wealthier than you are just because of your title or profession and may be more inclined to sue for a larger amount.

4. Litigious Society: Today we live in an extremely litigious society. Lawyers are suing for larger and larger amounts and if you bear any liability, they are winning. Even if you are not liable, the legal defense fees are expensive. Some say that having a million dollar umbrella causes attorney's to sue for more. This may be true, but if you need the protection, it is better to buy the policy and hope you never use it, than it is to need it and not have it.

5. Cost Savings Adjustments: If you decide to purchase an umbrella, you can reduce your overall cost by doing the following. First reduce your homeowners and auto liability limits to their minimum allowed. This may be $100,000 instead of $500,000 and this will save you some premium dollars to offset the cost of the new policy. Next consider increasing your deductible amounts from $100 to $500 or $1,000. This will also reduce your premiums, but remember that if you make a claim, your new higher deductible will cost more.

Summary: For many families today, young drivers, increasing net worth and higher incomes make personal liability protection a necessity rather than an option. The additional cost is not outrageous, usually $300 to $800 annually and if you make some adjustments to other policies, you can possibly cut your extra out-of-pocket cost in half. Make sure that when you look at your overall financial situation and your risk management strategies, you carefully consider this one.

To discover additional financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.

Why You Should Consider Umbrella Insurance   A Great Reason to Get a Personal Umbrella Policy - Your Car Is a Lethal Weapon!   Income Protection Insurance: A Boon for the Salaried Class   

The Scope Of Umbrella Liability Coverage

It is extremely frustrating and disappointing, when in the midst of crippling and devastating situations, one is bothered by worries of cots and legal settlements. Sure, this hassle can happen with anyone and the problems and worries are of an unexpected nature. True, there are so many options of insurance against such damages and unforeseen events. You can insure your assets and liabilities, like car, house and so on. Still, sometimes, your extensive insurance cover may fall short of settling and insuring all your expenses and arrangements. Therefore, it is necessary that you add an umbrella insurance policy to your arsenal of security. An umbrella insurance policy would be recommended for its versatile approach to the various liabilities and assets of the individual. However, before buying an umbrella insurance policy, one would be advised to know more about the scope of the umbrella liability coverage.

Like an umbrella, the umbrella insurance in your possession would be like a constant safeguard against the unexpected adversities and calamities. Sometimes, your insurances would not be sufficed to provide for all the expenses. Your vehicle insurance may pay for all the repairs. However, there could be gaps in the vehicle insurance cover. All the expenses and legal arrangements may not be provided for. In such an event, your umbrella insurance policy would function efficiently. The umbrella liability coverage would reach right up to covering all the legal settlement fees and the repair costs effectively.

Also, you may decide to take a house insurance. While it may secure the house against unseen damages and structural faults, your house insurance would not be sufficient to give an all round security against crimes like libel and so on. There is no reason to actually worry, if you have got an umbrella insurance policy. The umbrella liability coverage also gives you the security of costs of settlement of such crimes and offenses.

More specifically, the Umbrella Insurance, in your possession, would be of great advantage and benefit for settling the claims on liabilities. For instance, if some party has borrowed money from you and has not returned, then it could spell a loss for your business. In such a case, going to court is inevitable. Here too, the umbrella liability coverage would be of assistance. The umbrella policy would allow your legal claims to get solved. It would provide for the best legal assistance and the costs involved.

Why You Should Consider Umbrella Insurance   A Great Reason to Get a Personal Umbrella Policy - Your Car Is a Lethal Weapon!   Income Protection Insurance: A Boon for the Salaried Class   

Do I Need Excess Liability Coverage? Don't End Up Like Mary and John!

John and Mary live in a nice five bedroom home located in California. They've lived in their three thousand square foot home for twenty five years and are retired. Their home is paid for and worth about $900,000. They live off their retirement and have hardly no bills to pay. John and Mary have always had a homeowners policy to cover their home in case of fire, theft or other potential losses involving their home. Mary is age 75 and John is age 72. They hope to someday leave their home to their adult children.

On a nice spring day, Mary went to run some errands in her vehicle around her neighborhood. She pulled into the parking lot of her local grocery store. For some reason, after Mary parked her car , her foot slipped off the brake and hit the accelerator instead. Mary's car went through the wall of the grocery store. Her vehicle continued through the wall of the store and she collided into two pedestrians who were standing in line with their grocery carts.

Both of the pedestrians were rushed to the hospital due to the severity of the injuries they sustained from Mary's car striking them. Mary was upset about the accident and did not know what she should do. She called her insurance agent the same day of the accident and her agent took her information to start processing her claim.

Months later after the accident, Mary and John found out that the damages filed by the two pedestrians injured from the accident, exceeded the auto insurance liability limits that they carried with their insurance company. John and Mary found out from their adjuster that they would be personally liable for any money damages which exceeded the liability limits that they carried.

The adjuster also told them that the pedestrians attorney did an asset check to see if Mary and John owned property. The attorney found out that they owned a home and would be expecting them to contribute additional monies towards the settlement of the pedestrians claims in addition to the auto insurance liability limits that they carried.

Mary and John were devastated and did not realize that their home the most valuable asset they owned was at stake! They worked all their lives for their home and could not believe that it may be at risk due to the accident. John and Mary did not know they may have avoided contributing monies towards the pedestrians injury claims if they had excess liability coverage or an umbrella policy!

What is excess liability coverage or an umbrella policy? This policy would be liability coverage which would exceed your homeowners or vehicle policy for damages you may be liable for.

The cost of excess liability coverage or an umbrella policy is very minimal for the amount of additional coverage you would receive. You can expect to pay somewhere between $150-$400 annually for this coverage. Consult your insurance company for details. Remember, excess coverage is important for you to consider if your assets are substantial, especially being a homeowner. This extra protection may give you better peace of mind in the long run and will be well worth it!

Why You Should Consider Umbrella Insurance   A Great Reason to Get a Personal Umbrella Policy - Your Car Is a Lethal Weapon!   Income Protection Insurance: A Boon for the Salaried Class