WEDNESDAY, JANUARY 4, 2012
Umbrella policies are one of the most valuable parts of your insurance plan, but what is it and how can you determine if you need one? Many people carry an umbrella policy without fully understanding the benefits and effects of their policy.
 In general, the more you have the more protection you need. This philosophy is true regarding most types of insurance. For example, the more earning power you have, the more life insurance you need. The more cars you have, the more auto insurance you need and so on. The more you have to risk, the more you need to protect.
If you add up everything you need to protect, (cars, homes, property, etc.) and that figure is in excess of one million dollars, you can purchase excess liability insurance, also known as an umbrella policy. This excess liability or umbrella policy is the additional protection you need for the worst case scenario. For example, your dog runs through a fence and bites a passing child in the face. That could mean not only medical bills, reconstructive surgery, more medical procedures as the child changes and grows and perhaps a lawsuit brought by the child’s parents. Or perhaps you are involved in a car accident where someone is paralyzed. If you are found at fault and the victim needs long-term care, your auto insurance won’t enough to cover their healthcare costs.
This type of coverage will protect you in the event that something goes horribly wrong, and these types of situations could take everything from you. Umbrella policies can go from one to five million dollars, which is well over what your current insurance policy would cover. If you’re sued and you don’t have the assets to pay the damages, plaintiffs can go after your income, and in some states, your retirement account. Umbrella insurance will cover this.
Generally, a homeowner’s insurance policy will provide a minimum of $100,000 liability coverage when people are injured or property is damaged due to circumstances in which you or your family is responsible. Liability for auto insurance is around $25,000 per person and $50,000 per accident. While you can purchase higher liability rates for each of these individual policies, it is often still not enough protection, especially in today's lawsuit-hungry environment where million dollar judgments are fast becoming the rule rather than the exception, even for seemingly minor situations.
When you have umbrella insurance, the underlying homeowners, or auto policy provides coverage for the first portion of a lawsuit or damages. After that coverage is exhausted, the umbrella policy picks up and continues to provide coverage. Simply put, umbrella policies are there for you on that rainy day when the terrible comes raining down. It is your peace of mind policy.
To learn more about Louisville umbrella insurance, ask the agents at Claude Reynolds Insurance! They can help you determine if an umbrella policy is right for you.
By Matt Reynolds - Google+
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