In case of a lawsuit: Carry an umbrella policy

By Higginbotham on January 04 , 2016

Umbrella insurance coverage

It’s no secret that lawsuits are a daily occurrence. There are endless ways you can get sued. Consider just a handful of possibilities:

  • Your babysitter slips and falls down the stairs when leaving your home
  • You injure someone in an auto accident and the medical bills exceed your auto insurance limits
  • Your teenager crashes the family car through a fence and into the side of a neighbor’s house
  • While on vacation, you accidentally crash a rented boat into a pier
  • Your dog attacks a child riding a bike down your street

Any one of these scenarios could result in an expensive lawsuit, quickly tapping out the liability coverage limits on your auto or homeowners’ policy. And if that happens, your personal assets could be at risk.

Look closely at your auto and homeowner’s insurance policies. What are the liability coverage limits? $100,000 per occurrence? $300,000? 500,000? Damages in a lawsuit can easily run into the millions. Could you make up the difference? If not, everything you’ve spent years working for could be in jeopardy – your home, property, bank accounts, retirement funds, investments, even your future earnings if a judge allows a plaintiff to garnish your wages to pay off a settlement. It could ruin you.

Get familiar with the umbrella policy: A necessary added layer of protection.

An umbrella policy gives you an additional layer of protection, usually $1 million or $2 million, above your auto and homeowners’ liability coverage. And although it’s optional coverage, it may be a necessary option. Regardless of your income level, you probably have more to protect than you think. Do you own a home? Have a family? Have savings or retirement investments? A reputation you want to protect? Middle class people who aren’t millionaires need umbrella policies too. In fact, those in the middle class may need umbrella policies most, because their other policies and assets will likely fall far short of what is needed in the event of a lawsuit.

What does an umbrella insurance policy cover?

An umbrella policy provides an added layer of coverage that kicks in if you are sued for property damage or injury to other people. But even an umbrella policy won’t guarantee you’re covered for every possible liability. Many umbrella policies don’t cover:

  • Malpractice lawsuits
  • Workers’ compensation claims
  • Damage caused by a business or by any business-related activity
  • Damage you cause intentionally to any person or property
  • Your own medical bills due to injury or illness

What’s the easiest way to make sure your assets are protected? Call our experts at Higginbotham Insurance. We’ll review your current coverage and financial situation, and help you prepare for the financial storm caused by a lawsuit.

Related: 10 signs you might need an umbrella insurance policy


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