Imagine if you were sued, and the amount of money you need to settle the lawsuit out of court is more than what your existing insurance policy can cover?
Although it is not very likely, but if this happens, it can, in worst cases, make you lose a great part of your savings. An unbelievable nightmare right?
Well, in order to avoid living that nightmare, what is advisable is for one to get an Umbrella insurance policy.
So, what does the umbrella insurance do in essence? Read on.
Below we will be taking a close look at the areas under this extra liability coverage.
Areas like;
• What Is Umbrella Insurance?
• How Umbrella Insurance Works
• Is Umbrella Insurance Needed?
Now that we have gotten a scope of what we are going to be talking about, let's delve right into it.
WHAT IS UMBRELLA INSURANCE?
Umbrella Insurance is a type of personal liability insurance that automatically comes to the insured individual's aid in cases where the legal claims brought against the insured is larger than the individual's other main insurance policies.
For example, if the insured individual owns a boat, and the individual's watercraft liability insurance doesn't cover the whole legal claim, the individual's umbrella insurance policy picks up from where the watercraft liability insurance left off.
Umbrella insurance policy even has an advantage over other main insurance policies, due to the fact that it covers certain liability claims those policies may not cover.
These claims include; slander, libel, and false imprisonment.
If the insured individual is a renter too, the umbrella insurance policy covers beyond what the individual's renter's insurance policy covers.
HOW UMBRELLA INSURANCE WORKS
Below are some case scenarios that the umbrella insurance could offer coverage for if it happens that the insured individual's homeowner's or auto insurance policy wasn't sufficient:
✓ In the case where the insured individual's dog runs out of his or her house, and attacks a neighbor jogging on the street.
The neighbor then decides to sue the individual for the coverage of her medical expenses, pain and suffering, and including lost wages due to being unavailable at work for the days of being treated.
The umbrella insurance will cover all these for the individual.
✓ The individual accidentally causes a 12-car collision, and the auto insurance policy purchased by the individual isn't enough to repair all 12 cars of the victims.
And, in the case of victims of the accident sustaining injuries, the individual's personal liability coverage is not sufficient to pay for their medical bills.
Here, the umbrella insurance policy will also work its magic and be of great help.
✓ The individual's son gets into an argument that eventually leads to a fight in school, and in the course of the fight, punches a fellow student and breaks his nose.
Then the boy's parents sue the individual for damages.
The umbrella insurance policy could also help here.
✓ When the individual is out of town, the individual's teenager throws a party.
At the party, someone brings alcohol and after the party, almost everyone leaves drunk. One of the teenage guests gets arrested for maneuvering wheels under the influence of alcohol.
The individual gets sued.
The umbrella insurance could help here.
✓ The individual's son's school is going on a field trip lunch, so the individual makes bread sandwiches and sends them to the school.
Some students who ate it developed food poisoning, and their parents sue the individual.
The policy will cover the claims.
Heads up! The umbrella policy can also provide coverage for wrongful entry, malicious prosecution, invasion of privacy, and other unusual claims.
If you paid attention to the examples from above, you'd glean from it that umbrella insurance covers other members of the individual's family and/or household, and not just the individual alone.
In this case, the individual can be rest assured if his or her son isn't a good driver - simply because the umbrella insurance policy will cover the medical bills and claims of the injured person(s), in the case of the child being responsible for an accident.
With all these being said, you should make sure to understand how the policy you want to get defines a household member, to be able to get the coverage you need.
Another thing you might have noticed while paying close attention is that, any incident causing the individual to need the umbrella insurance policy doesn't necessarily have to involve his or her vehicle or property, before it can be covered, in addition to the fact that the policy acts as coverage above and beyond the individual's homeowners and auto insurance.
Another plus advantage!
The individual is also covered worldwide, though there is an exception of homes and/or cars the individual owns which are under other countries' laws.
IS UMBRELLA INSURANCE NEEDED?
In the decision-making process of getting umbrella insurance, there's likely to be a fear factor involved.
Most insurance companies will recommend it to individuals with the warning that the world we live in currently is a lawsuit-happy world, where literally anyone can sue anyone for any little thing, which may in turn ruin the latter's financial strength.
Generally, individuals are advised most of the time that if the total value of their assets is much more than the limit of their homeowners or auto insurance liability, getting an umbrella insurance policy is very much needed.
Another reason why this advice is given is so that the individual can have sufficient liability insurance to fully cover his or her assets so that he or she doesn't end up losing them due to a lawsuit.
Sometimes, this advice doesn't really apply to some people.
The question that everyone wanting to get an umbrella insurance policy should ask themselves is; “Is there a great risk of me being sued?”
It is common knowledge that everyone is, so basically everyone needs umbrella insurance.
Paying a little price for extra needed comfort wouldn't hurt, would it?
Although some people are at higher risk of getting sued than others, that is, if they involve in jobs or activity that puts them at a higher risk of incurring excess liability.
