Personal umbrella liability insurance financially protects you against a catastrophic lawsuit or judgment. It provides expanded liability coverage over and above your primary liability protection. It increases the coverage afforded under your homeowners/renters and auto insurance policies.
Do not assume that your automobile and homeowners insurance coverage provides you with enough liability protection. If you have significant assets you need to consider additional insurance coverage. A serious personal injury can leave you exposed to a financial exposure over and above your ability to pay.
These policies are generally sold to individuals that have significant assets to protect. Contrary to popular belief, these policies are not just for the very wealthy. Individuals with high or above-average incomes may need this type of protection as well. High-income earners may face financial ruin if they are faced with a significant personal injury judgment that exceeds their limits of liability insurance.
Let us assume that you are at fault in causing a very serious motor vehicle accident that kills or significantly injures another driver. You have only $100,000 in automobile liability insurance on your car. The injured party has injuries and medical bills that exceed your 100,000 policy. Without an umbrella policy, you may be responsible for paying for all the injured person's damages, over and above the limits of your $100,000 liability policy. An umbrella policy provides you with an additional layer of protection that would pay over and above the limits of your underlying policy.
An excess insurance policy will not only protect you if you are involved in an automobile accident, but also protects you in the event you are held liable for an accident that occurs at your home. As mentioned above, an umbrella policy expands the coverage afforded under your auto liability policy and your homeowner's liability policy.
Without adequate insurance, even a high income earning could be forced into bankruptcy by a judgment in excess of his available insurance coverage. If your assets exceed $100,000 you may wish to consider an umbrella policy.
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