Many people keep an umbrella in the car or office, ready at
a moment’s notice if blue skies give way to rain clouds. It’s not an act of
pessimism, it’s just common sense.
Likewise, a growing trend in the insurance industry is
umbrella liability coverage. Much like a regular umbrella does for rain, an
umbrella policy shields its holder against liability claims that go above and
beyond the limits of personal insurance policies.
For instance, liability coverage provided by a homeowners or
auto insurance policy has set limits, such as $300,000. In the event you or
someone in your household is liable for injuries or damages to others, you
could be responsible for coming up with any excess funds if a settlement
exceeded your liability limits.
That’s where an umbrella liability policy comes into play,
providing excess liability coverage and potentially saving you hundreds of
thousands of dollars.
You might think that such financial security would come at a
high price. In fact, most umbrella policies come relatively cheaply, sometimes
costing less than $200 a year for $1 million worth of coverage.
Sounds like a great deal.
But as with any great deal, consumers should consider their
individual needs. If you rarely watch television or movies, you wouldn’t buy a
new home entertainment system just because it was on sale. Similarly, before
you rush out to insure yourself for $1 million or more simply because you can,
ask yourself, “Do I really need this?”
A lot depends on your lifestyle factors. For instance, you
might have a greater need for increased liability coverage if you have a
swimming pool or trampoline on your property, as those items are potentially
dangerous and could result in huge lawsuits if a guest of yours is
injured.
On the other hand, some people do not have the same risk
factors for large claims against them.
In the end, it is each individual’s decision whether an
umbrella policy is a wise investment. Your insurance agent can help you
identify your risk factors, but the decision is yours.
Todd Stanley has been an agent for American Family Insurance since 2011.
His office is located at 2500 Glenn Ave., Sioux City. Todd can be
contacted at (712) 274-1045 or through his website at
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