[et_pb_section fb_built="1" _builder_version="4.0.9"][et_pb_row _builder_version="4.0.9"][et_pb_column type="4_4" _builder_version="4.0.9"][et_pb_text _builder_version="4.0.9"]<h1 class="farticle-title" style="text-align: center;"><span style="color: #0c0c0c;"><strong>You Probably Need Umbrella Insurance</strong></span></h1>[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version="4.0.9"][et_pb_column type="4_4" _builder_version="4.0.9"][et_pb_text _builder_version="4.0.9"]<div align="center">
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<p style="text-align: left;"><span style="color: #0a0a0a;"> </span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;">Liability insurance protects you and your family’s finances from major disasters, such as a lawsuit against you (even if the charges are groundless). For example, if you crash into someone else, liability car insurance pays for a legal defense and any judgments or settlements. Or if your dog bites someone, homeowners liability insurance covers medical expenses.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;">But the safety net of liability insurance only stretches as far as the coverage amount you have. If you have significant assets that you could lose in a lawsuit, you need higher levels of liability insurance. Here’s more on <a href="https://www.forbes.com/advisor/homeowners-insurance/what-can-be-taken-in-lawsuit/" ga-data-track="ExternalLink:https://www.forbes.com/advisor/homeowners-insurance/what-can-be-taken-in-lawsuit/" style="color: #0a0a0a;">what can be taken from you in a lawsuit</a>.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;">That’s where umbrella insurance policies come in. An umbrella policy is designed to help prevent financial ruin from a catastrophic event that you’re financially responsible for.</span></p>
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<h2 style="text-align: left;"><span style="color: #0a0a0a;">What is Umbrella Insurance?</span></h2>
<p style="text-align: left;"><span style="color: #0a0a0a;">Umbrella insurance provides “excess liability insurance” (meaning additional coverage) beyond the liability insurance already in your auto, homeowners and/or watercraft insurance policies. It’s for expensive situations where medical bills or repairs exceed your “base” auto, home or boat policies. For example:</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;"><strong>You cause a serious auto or boating accident. </strong>Auto accident bills can amount quickly, especially if you’re responsible for the medical bills of multiple people. Your auto or watercraft insurance policy would pay first, up to its maximum, followed by umbrella insurance.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;"><strong>Your dog bites someone. </strong>Dog bites are typically covered by a homeowners insurance policy. But if you’re sued for an amount above your <a class="wpil_keyword_link" href="https://www.forbes.com/advisor/homeowners-insurance/best-homeowners-insurance-companies/" title="home insurance" ga-data-track="ExternalLink:https://www.forbes.com/advisor/homeowners-insurance/best-homeowners-insurance-companies/" style="color: #0a0a0a;">home insurance</a> liability limits (such as medical bills and pain and suffering), your umbrella policy would start paying.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;"><strong>You drive your car into a building. I</strong>t happens–someone is parked close to a convenience store and they put the car in drive rather than reverse, causing extensive building damage. An <a data-wpil="url" href="https://www.forbes.com/advisor/car-insurance/best-car-insurance-companies/" ga-data-track="ExternalLink:https://www.forbes.com/advisor/car-insurance/best-car-insurance-companies/" style="color: #0a0a0a;">auto insurance</a> policy would pay for the property damage first, followed by an umbrella policy.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;"><strong>You accidentally injure someone. </strong>If you or a family member accidentally injures someone, umbrella insurance will pay when auto or home insurance is exhausted. For example, say your son accidentally throws a baseball into someone’s face, causing extensive injury. Your homeowners liability insurance will pay first, followed by umbrella insurance.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;"><strong>You’re on a board of directors of a charity and are sued for a board-related issue.</strong> An umbrella policy may provide coverage for lawsuits against you related to your work on a board of directors. The coverage may depend on whether the board is a non-profit and whether you’re paid for your service. It’s best to consult your insurance agent to understand whether you’ll be covered.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;">According to the Insurance Information Institute, a $1 million umbrella policy will cost about $150 to $300 per year. Generally, the next million will cost roughly $75 and $50 for every million after that.</span></p>
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<h2 style="text-align: left;"><span style="color: #0a0a0a;">How Does Umbrella Insurance Work?</span></h2>
<p style="text-align: left;"><span style="color: #0a0a0a;">Umbrella insurance kicks in when your “base” liability limits have been reached. Here’s an example: You cause a car accident that results in severe injuries for multiple people. The medical bills are $400,000, which exceeds your $300,000 in <a href="https://www.forbes.com/advisor/car-insurance/liability-insurance/" ga-data-track="ExternalLink:https://www.forbes.com/advisor/car-insurance/liability-insurance/" style="color: #0a0a0a;">liability auto insurance</a> policy limits. Your umbrella insurance can cover the remaining $100,000.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;">To add to this example, let’s say one of the injured parties is a highly paid professional who cannot perform their job for six months because of the injuries. Because your car insurance liability limits are exhausted, without umbrella insurance your assets such as your house and savings could be at risk with the extra layer of insurance from an umbrella policy.</span></p>
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<p style="text-align: left;"><span style="color: #0a0a0a; font-size: 26px;">Umbrella Coverage Beyond the Base Policy</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;"></span><span style="color: #0a0a0a; font-size: 14px;">Another advantage of umbrella insurance is that it usually provides coverage that’s not found in the base auto or homeowners policy at all. For example:</span><span style="color: #0a0a0a;"></span></p>
<ul style="text-align: left;">
<li><span style="color: #0a0a0a;">Libel, defamation or slander. For example, if you post something defamatory about someone else to a website, you could be used.</span></li>
<li><span style="color: #0a0a0a;">False arrest, imprisonment or detention</span></li>
<li><span style="color: #0a0a0a;">Malicious prosecution</span></li>
<li><span style="color: #0a0a0a;">Wrongful eviction or entry</span></li>
<li><span style="color: #0a0a0a;">Invasion of privacy</span></li>
</ul>
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<h2 style="text-align: left;"><span style="color: #0a0a0a;">What Umbrella Insurance Won’t Cover</span></h2>
<p style="text-align: left;"><span style="color: #0a0a0a;">Umbrella insurance doesn’t cover your own injuries or damage to your own property. For example, your health insurance would typically cover medical expenses for injuries and your homeowners insurance would cover your property from problems like fire or theft. Here are other losses typically not covered by umbrella insurance:</span></p>
<ul style="text-align: left;">
<li><span style="color: #0a0a0a;">Damage to your personal belongings</span></li>
<li><span style="color: #0a0a0a;">Business losses</span></li>
<li><span style="color: #0a0a0a;">Intentional criminal acts</span></li>
<li><span style="color: #0a0a0a;">Written or oral contracts</span></li>
</ul>
<p style="text-align: left;"><span style="color: #0a0a0a;">While umbrella insurance provides an important safeguard against lawsuit judgments and settlements, examples of situations it generally won’t cover include:</span></p>
<ul style="text-align: left;">
<li><span style="color: #0a0a0a;">Intentional acts or injury</span></li>
<li><span style="color: #0a0a0a;">Damages due to nuclear radiation, war or terrorism</span></li>
<li><span style="color: #0a0a0a;">Communicable disease, such as a lawsuit against you for giving someone herpes.</span></li>
</ul>
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<h2 style="text-align: left;"><span style="color: #0a0a0a;">How to Buy Umbrella Insurance</span></h2>
<p style="text-align: left;"><span style="color: #0a0a0a;">Umbrella insurance is commonly available from insurers that sell auto, home and watercraft insurance.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;">You’ll need a certain amount of liability insurance in the base policy before you can add umbrella insurance. For example, you might need to have:</span></p>
<ul style="text-align: left;">
<li><span style="color: #0a0a0a;">Home insurance: $300,000 in liability</span></li>
<li><span style="color: #0a0a0a;">Auto insurance: $100,000 per person/$300,000 per occurrence for bodily injury and $100,000 for property damage, or more</span></li>
<li><span style="color: #0a0a0a;">Watercraft insurance: $300,000 in liability</span></li>
</ul>
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<h2 style="text-align: left;"><span style="color: #0a0a0a;">Do You Need Umbrella Insurance?</span></h2>
<p style="text-align: left;"><span style="color: #0a0a0a;">Wealthy households in particular need umbrella insurance. A wealthy individual or family can be a lawsuit target.</span></p>
<p style="text-align: left;"><span style="color: #0a0a0a;">In addition, these circumstances could increase your chances of being sued:</span></p>
<ul style="text-align: left;">
<li><span style="color: #0a0a0a;">You serve on a charitable board.</span></li>
<li><span style="color: #0a0a0a;">You have a swimming pool, pond or trampoline.</span></li>
<li><span style="color: #0a0a0a;">You have dogs, horses or other large animals.</span></li>
<li><span style="color: #0a0a0a;">You manage a family trust.</span></li>
<li><span style="color: #0a0a0a;">You host large parties in your home.</span></li>
<li><span style="color: #0a0a0a;">You employ household staff.</span></li>
<li><span style="color: #0a0a0a;">You have a high public profile.</span></li>
</ul>
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<h2 style="text-align: left;"><span style="color: #0a0a0a;">How Much Umbrella Coverage Do I Need?</span></h2>
<p style="text-align: left;"><span style="color: #0a0a0a;">When selecting the right amount of coverage there are a couple things to consider.</span></p>
<ul style="text-align: left;">
<li><span style="color: #0a0a0a;">Value of your assets: An umbrella policy should cover at least the value of your assets — this is what you stand to lose in a lawsuit.</span></li>
<li><span style="color: #0a0a0a;">Potential future income loss: Your current assets and future income could be at risk in a lawsuit. Even if you have a limited income now, consider your potential future income. For instance, if you’re a medical student, you should consider your future earning potential.</span></li>
</ul>
<p style="text-align: left;"><span style="color: #0a0a0a;">A long legal proceeding is stressful and can potentially ruin a reputation, whether or not the lawsuit was baseless. Purchasing an umbrella policy won’t help the stress, but it can save everything you’ve worked so hard to amass.</span></p>
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<div align="center" style="text-align: justify;"><span><span style="color: #000000;">To read the full article, </span><a href="https://www.forbes.com/advisor/car-insurance/umbrella-insurance/">click here</a><span style="color: #000000;">.</span></span></div>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]