What is the Umbrella Insurance

To give you a clear view of this umbrella insurance policy, here is a nightmare to learn from. Unknowingly, your car can skid and crash into a Mercedes Benz driven by a highly paid business executive tomorrow. He is injured badly and cannot return to work. Then in the process, a jury awards him millions of dollars and you are held responsible to pay the amount. This can wipe out your entire financial stability. The Superior court can take your savings away and can go after your home. Additionally, the court can also require you to give up a part of your salary for next decades to come.

But for some people, this nightmare can never materialize. They have that extra insurance policy known as the umbrella insurance or the excess liability coverage. This will cover liability for the lawsuits and medical bills of the auto accident victim. Its liability is wide enough that it includes coverage for a teenage guest who dives into the shallow end of the swimming pool. It even covers the simple tripping of a deliveryman on your front steps.

Today, there are still a lot of people who owns major assets who either do not have the umbrella insurance or have not bought enough for coverage. There are those who do not know about what the umbrella coverage is for which actually pays lawyers and other legal expenses. Some may have heard of it but do not understand it. But there are those who decide not to buy it even though the cost is only a fraction of the price of a typical package for auto and home insurance.

Lawsuits can be found everywhere. More than ever, large amounts of money are now awarded to lawyers. Liability insurance has their limits like the auto, watercraft and homeowners policies. When an unfortunate accident happens and you found at fault, you may not have enough insurance to cover for your negligence. No one can predict how much a judge may award an injured person. That is why the umbrella insurance is not just for the wealthy anymore, but rather a much needed protection for every policyholder.

The umbrella insurance is designed to give you the added liability protection beyond and above the coverage limits of a homeowners’ policy, the watercraft policy or the auto policy. Most insurance companies have umbrella policies that can add liability protection between 1 to 5 million. This type of protection kicks-in after exhausting the current liability policies.

Generally, the liability insurance covers expenses such as the injured person’s medical bills and rehabilitative therapy plus the lost wages of the injured due to the negligence of a person. A portion of the liability insurance also covers a legal defense representative necessary to proving in court the negligent and at fault person of the incident.

Summing up the medical expenses for the injured person and the legal fees of the negligent person, your standard liability insurance for homeowners’ or auto policies might not be sufficient to cover liabilities. Most U.S. states have the financial responsibility laws that hold drivers accountable for the bodily injury and property damage resulting from car accidents. The driver could be sued for the damages. The state can seize the personal assets of the driver resulting from a lawsuit. These laws also apply to homeowners and watercraft owners.

This is why the umbrella insurance is the good news today. You can have that added liability protection without a large additional cost. This is an inexpensive insurance coverage that widens your liability protection.

Additionally, this insurance policy covers even your non-business activities anywhere in the world. The umbrella insurance policy is coverage that no one should go without.