What is Umbrella insurance?Very simply, Umbrella insurance is added liability coverage in case you are sued after injuring someone or their thing. This can be while you were driving or just from your everyday activities. It can even be protection in case of a trip and fall at your home, etc.
How does an Umbrella policy work?An Umbrella policy basically kicks in and starts paying, normally up to $1million (but more can be purchased) once the auto policy or the home policy have been used up for the payout of someone else's injuries which you are responsible for.
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The biggest benefit?
It can be free
Umbrella policies, when bundled with the same company as you have your home and auto with can give enough of a savings on the auto and the home that the umbrella policy added into the account is $0 extra. Its kind of like a "buy two, get one free" deal
Underinsured & UnInsured Motorist
This is actually a coverage for you and your family in case another party does not have enough auto liability to take care of you and yours for injuries the other person caused. In Michigan, typically this helps pay for non-medical issues that arise after an auto loss, like pain and suffering.
Who needs an Umbrella policy?
Honestly, most people need one.
Young Adults: Often times, decision making is not the best, and as a result, lots of severe accidents happen at this age. One might think, "I don't have anything to my name at this point. If anyone sues me, they won't get much". The problem with that, is you have a whole future in front of you. One with lots of earning potential. The court knows that. The opposing attorney knows that. This is how wage garnishments happen. Not a fun thing to have hanging over your head for years to come. |
Young Families: Kids bring about a lot of situations with added risk. Think sleep overs where kids are wound up, bringing friends on trips and not knowing they cannot swim, giving a neighbor kid a ride home, coaching the kids soccer team... In each of these situations, the adults are responsible for another child, one they may not fully know, and permanent injury (or worse) to a child is a pretty steep payout as lawsuits go.
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Older Families: As your kids approach an age where they can drive, lots of things are going on in their brains, bodies, etc. that bring about stress, bad decision making and yet added riskiness in the actions they make. They can be a walking risk
Middle Age: You may have children in college you are supporting, or you are finally in a phase of life where you have hit your prime earning potential and are saving for retirement. You may have accumulated some nice things at this point in life. All these assets would be awful to lose for having too little coverage.
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How Much Umbrella Insurance Do I Need?
An individual's umbrella insurance policy limit should at least cover the assets that might be exposed once underlying home or auto policy liability limits are exhausted. The extra coverage of an individual's umbrella policy can help protect them from expenses they incur once their motor vehicle or homeowners' policy limit has been reached.
RGC Insurance advises high-net-worth individuals whose assets exceed their liability coverage through standard insurance policies to apply for an umbrella policy to avoid negative financial repercussions. It's also worth mentioning that federal regulations protect certain assets, such as employer-sponsored retirement accounts, from most lawsuits. So, clients can usually exclude them from their calculations. Still, confirming your coverage needs with a reputable insurance agent is vital to ensure optimal protection without overspending on insurance. |
Nearing or in Retirement: Those nearing retirement and especially in retirement have their entire life savings to lose. One bad accident in this phase of life would be absolutely demoralizing, financially. No one wants to stay in the job force longer than needed, especially not re-enter the job force to pay for a lawsuit
An umbrella protects you from each of those things. What Are Umbrella Policy Limits?
Umbrella insurance kicks in when an individual's underlying liability limits for other existing insurance policies are reached. Umbrella coverage is usually sold in $1 million increments up to $5 million total.
Premium costs for this type of insurance can range from fairly low to $1,000 or more, with the average cost being about $380 annually for coverage limits of $1 or $2 million. These policies may provide additional coverage for accidents, injuries, certain lawsuits, property damage, medical bills, and personal liability. Individuals who own dangerous items that can cause significant injuries, such as trampolines, swimming pools, or dogs, may need umbrella insurance. People who engage with others, such as coaches, board members, and landlords, may also buy umbrella insurance. You can learn more about umbrella insurance and other potential coverage needs by speaking to an experienced insurance agent. |
Thinking an Umbrella policy might be good to get a quote on?
Rather watch a video on Umbrella insurance? Here ya go
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