Good Evening Everyone: Since we are in the midst of the monsoon (I find this term hilarious living in the desert) I thought it would be appropriate to talk about umbrellas. In the insurance world, an Umbrella is what covers you in the event of liability. This umbrella covers over the top of your auto and home coverage (hence the word umbrella). Let's look at an example:
You get into a car accident and you are sued for $1,000,000. Remember it does not matter whether you were right or wrong, things happen in life and there are times you may loose or may have caused something inadvertently. So you lost the law suit. Where are you going to get the money from? Your Auto coverage will take care of part of this, so you have $250,000 in liability coverage, that leaves a balance of $750,000 to go. You have your toys and your investments and your income. How much of this do you want to designate towards the $750,000 that you still owe? You could declare bankruptcy but many of your assets that are available will be go towards the settlement.
A great definition of insurance is a transfer of the risk from you to someone else. If we had a $1,000,000 umbrella policy, the $750,000 would come from this and your investments and other things you have worked hard for would still be yours. So the risk from this million-dollar lawsuit was transferred from your car insurance carrier with the balance transferred to your umbrella policy. So you have to use all your liability coverage in the auto (or home) coverage before you use the umbrella policy, the cost of the umbrella policy is really inexpensive. Umbrella policies pay after the home/auto policies pay out first. Would you sleep better knowing you were covered for $1,000,000 + in liability?
The more things physically and financially that you accumulate, the greater the risk that needs to be transferred. Unless you self insure, meaning you are covering the risk yourself.
Remember "Better call Saul" adds from Breaking Bad? This is a guy who hands out neck braces to everyone on their initial office visit. (TV series that you can watch on Netflix, if you want to do more research on Saul). We have our own versions of this on our TV airwaves daily. So an Umbrella Policy covers liability over and above your home and auto coverage. Not everyone needs an umbrella policy but more need this coverage than actually have it. If your cumulative net worth is exposed then you need to price one of these out for you. Cost of this coverage is not very much but you will be glad you have it in the event your liable. With multi-policy discounts, this can take the price down as well. Call us today and we can get you covered!