Umbrella Liability Insurance
Having umbrella liability insurance is the best way to supplement an existing policy; it also provides extra security against being sued for an accident and being required to pay the judgment out of pocket. Unfortunately, accidents happen all the time; a driver can look away from the road for a second and cause a major collision. A tree in a person's yard can be struck during a storm and fall, damaging a neighboring house. In both of these cases, the person deemed liable for the damages must make reparations for whatever monetary loss the victim incurs. And many people mistakenly assume that since they have insurance, whether it be auto or homeowner's, that they are covered completely in case of an accident. While this is, for the most part, the case, when the accidents are of a serious nature, sometimes the financial liability of the insured is more than his insurance company has agreed to pay. In those situations, having an extra, supplementary policy can protect a person from hefty judgments and the loss of money, property, and assets.
In today's society, filing a lawsuit seems to be a person's first course of action if something does not go his way. Lawyers advertise in continuous loops on the television, promising future clients that they will not accept a penny until the case is won, with the understanding, of course, that the lawyer is shrewd enough to ensure that happens. If a person slips and falls in a neighbor's yard, breaking an ankle, the victim can take his case before a judge, who may or may not award substantial punitive damages. Granted, many lawsuits are justified, and give the complainant an avenue by which to seek justice in the event that an accident happens and the insurance does not totally compensate the costs. Keeping in mind, however, that these suits are prevalent and judgments can be financially devastating, a person would be taking an enormous risk by not having umbrella liability insurance.
An important thing to understand is that a policy, if it is a standard one, has a very clearly defined limit that the insurance company will pay out if the insured causes an accident, or is found liable for one. Depending on the company a person is with, and the policy they have, these limits may vary, but they are usually in the hundreds of thousands. So what happens if a person's policy will only pay $300,000 in case of an accident, but the damages total nearly one million dollars? This is where umbrella liability insurance comes into play. The extra policy does just what the name suggests; it acts as an umbrella, covering the insured from massive out of pocket costs. As soon as the primary policy reaches its maximum payout, then the supplemental umbrella insurance kicks in, paying the rest of the bills. Without this extra coverage, however, a person is leaving himself vulnerable to a lawsuit, where he may be required to pay the difference out of his own pocket.
The Bible warns that people should be prepared for misfortune and should make provisions before a disaster. "Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth" (Ecclesiastes 11:2). From a financial standpoint, having umbrella liability insurance is yet another way to protect one's assets from the threat of a future lawsuit or judgment. And doing so does not have to put a strain on the pocketbook. Many assume that this type of coverage is meant for the wealthy, and that, as such, it is extremely expensive. The reality, however, is that not only should all people consider purchasing umbrella liability insurance, but that once a person makes the decision to, he will also be surprised by its affordability. For a basic plan, a buyer can expect to only have to pay a couple hundred dollars annually, and many consider the cost to be well worth the peace of mind.
Before going to purchase umbrella liability insurance, a person needs to be just as thorough as he would when buying other forms of insurance. Many experts and financial planners advise using one company for all of a person's policies: homeowners, auto, life, umbrella, etc. By doing this, a person ensures that if a situation ever arises where both the basic policy and the extended umbrella coverage are required, only one company will be handling the matter. This negates the possibility of two different companies fighting over who is going to pay what after an accident. This also offers the consumer the ease of only having to pay one collective bill for his policies each year.
Granted, many financial planners have varying opinions on the wisdom of having an umbrella liability insurance policy. Some will say that only those with a certain amount of net worth should be concerned with having the extra protection. Others, of course, claim that anyone with money in the bank should look into buying a policy, claiming that the best way to prevent a financial disaster is to prepare for one. Regardless of what the professionals say, and who they ultimately decide should be concerned with umbrella liability insurance, the responsibility is up to the consumer to make sure he is adequately protected and to decide for himself if he wants additional coverage. He is the only one who can decide whether the added insurance is necessary, and if so, how much liability he is willing to pay for. And while chances are that the insured will never have need of the extra protection, many find they have peace of mind just knowing that the policy is in place.
In today's society, filing a lawsuit seems to be a person's first course of action if something does not go his way. Lawyers advertise in continuous loops on the television, promising future clients that they will not accept a penny until the case is won, with the understanding, of course, that the lawyer is shrewd enough to ensure that happens. If a person slips and falls in a neighbor's yard, breaking an ankle, the victim can take his case before a judge, who may or may not award substantial punitive damages. Granted, many lawsuits are justified, and give the complainant an avenue by which to seek justice in the event that an accident happens and the insurance does not totally compensate the costs. Keeping in mind, however, that these suits are prevalent and judgments can be financially devastating, a person would be taking an enormous risk by not having umbrella liability insurance.
An important thing to understand is that a policy, if it is a standard one, has a very clearly defined limit that the insurance company will pay out if the insured causes an accident, or is found liable for one. Depending on the company a person is with, and the policy they have, these limits may vary, but they are usually in the hundreds of thousands. So what happens if a person's policy will only pay $300,000 in case of an accident, but the damages total nearly one million dollars? This is where umbrella liability insurance comes into play. The extra policy does just what the name suggests; it acts as an umbrella, covering the insured from massive out of pocket costs. As soon as the primary policy reaches its maximum payout, then the supplemental umbrella insurance kicks in, paying the rest of the bills. Without this extra coverage, however, a person is leaving himself vulnerable to a lawsuit, where he may be required to pay the difference out of his own pocket.
The Bible warns that people should be prepared for misfortune and should make provisions before a disaster. "Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth" (Ecclesiastes 11:2). From a financial standpoint, having umbrella liability insurance is yet another way to protect one's assets from the threat of a future lawsuit or judgment. And doing so does not have to put a strain on the pocketbook. Many assume that this type of coverage is meant for the wealthy, and that, as such, it is extremely expensive. The reality, however, is that not only should all people consider purchasing umbrella liability insurance, but that once a person makes the decision to, he will also be surprised by its affordability. For a basic plan, a buyer can expect to only have to pay a couple hundred dollars annually, and many consider the cost to be well worth the peace of mind.
Before going to purchase umbrella liability insurance, a person needs to be just as thorough as he would when buying other forms of insurance. Many experts and financial planners advise using one company for all of a person's policies: homeowners, auto, life, umbrella, etc. By doing this, a person ensures that if a situation ever arises where both the basic policy and the extended umbrella coverage are required, only one company will be handling the matter. This negates the possibility of two different companies fighting over who is going to pay what after an accident. This also offers the consumer the ease of only having to pay one collective bill for his policies each year.
Granted, many financial planners have varying opinions on the wisdom of having an umbrella liability insurance policy. Some will say that only those with a certain amount of net worth should be concerned with having the extra protection. Others, of course, claim that anyone with money in the bank should look into buying a policy, claiming that the best way to prevent a financial disaster is to prepare for one. Regardless of what the professionals say, and who they ultimately decide should be concerned with umbrella liability insurance, the responsibility is up to the consumer to make sure he is adequately protected and to decide for himself if he wants additional coverage. He is the only one who can decide whether the added insurance is necessary, and if so, how much liability he is willing to pay for. And while chances are that the insured will never have need of the extra protection, many find they have peace of mind just knowing that the policy is in place.
Umbrella Liability Insurance
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Reviewed by Anonymous
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