When it comes to insurance, a liability umbrella seems to be one of the types of coverage that people have heard of, and maybe even pay a premium for, but most of the time they aren’t exactly sure what it is, or what it covers.
An Umbrella policy provides an extra layer of protection by extending the limits of your primary auto, home, boat, motorcycle, or other insurance policies.
If you have an auto insurance policy, you have “Bodily Injury” coverage, which is in place to help pay for medical expenses, time away from work, pain and suffering, and other expenses that the party in the other vehicle may incur in an accident. “Bodily Injury” coverage is also included on boat, motorcycle, and ATV policies as well.
Homeowners, Renters, and Condo policies will also include liability coverage, in the event there is an incident on an insured’s property.
The liability coverage that is included on your auto or property policy is your first line of defense to help pay the other individual for damages. In the event of a serious accident though, this may not be enough.
Let’s say for instance, we have a driver that is heading to work and gets involved in a car accident. There are three people in the other vehicle and all of them are injured. As a result, there are medical bills that include an overnight stay in the hospital for all three, surgery and physical therapy treatments for one of the passengers, and loss of income for all three because they were not able to return to work immediately. Added to this is a lawsuit for pain and suffering by the occupants of the other vehicle.
The driver had $500,000 liability coverage from his auto policy that has helped pay for the expenses for the people in the other vehicle. But after the judgement in court where the occupants in the other vehicle were awarded $100,000 each, the maximum his auto policy will pay has been reached…and the driver still owes over $200,000 to the other parties.
Unfortunately, the amount that is still owed puts personal assets as risk (i.e. money in the bank, investments, personal property, etc.) If the amount of personal assets are not enough to pay for the additional amount owed, future earnings will need to be paid (i.e. garnishing wages).
A Personal Liability Umbrella provides the extra layer of protection that is needed in this scenario. Umbrella policies usually start at $1,000,000 in coverage, and the affordability of an Umbrella policy could be a pleasant surprise. Policies usually range from $150 to $250 per year.
At Stonebridge, we see clients on a daily basis that are at different stages of life. Clients that are starting their first job, getting married and starting a family, adding teen drivers, planning for retirement, and so on. Everyone has their own goals, wants, needs, and values. As life changes, the need for different insurance products changes as well. A Liability Umbrella policy is different. If you would like more information, or have questions about whether an Umbrella policy is right for you, don’t hesitate to call Brian or Cherry at (308) 698-0144 to set up an appointment today.