Doug Fudge, President of Fudge Insurance, recently gave an expert interview for the real estate developer, Reunion Resorts. In it, he urged homeowners to consider adding an umbrella liability policy to their insurance portfolio. This insurance, meant to protect the insured and their assets from extreme litigation can be used in addition to an auto, boat, RV, or home insurance policy.
What is an Umbrella Liability Policy?
A traditional home insurance policy will cover liability up to about $300,000. Auto limits vary from $10,000 to $250,000 based on your policy. However, in a society where lawsuits can quickly escalate, that coverage may not be enough. If you are found liable in an accident and are sued for more than your regular policy covers, any savings or investments you have as well as property assets can be at risk. This is why many consumers choose to purchase an umbrella policy.
“The umbrella can provide anywhere from $1,000,000 to $5,000,000 of additional liability coverage,” states Fudge.
As its name suggests, the umbrella liability policy is protection that can help mitigate a financial storm if it comes. For a minimal price a year, an umbrella can be purchased to provide excess liability coverage above and beyond what an auto and homeowner’s policy provide.
How an Umbrella Policy is Used
In the event that it’s needed, an umbrella will come into effect after a liability payment exceeds what is covered by an underlying home or auto policy.
For example, someone is found at fault in an automobile accident where the other driver incurred 500,000 in medical bills. Their auto policy covers up to $250,000 in liability. Now the insured is responsible for another $250,000 in damages. If that driver had an umbrella policy, it would kick in to cover the additional $250,000. Otherwise, the insured would be responsible and could face serious financial hardship. An umbrella policy is a way to protect financial losses in the unfortunate event of a large liability claim.
Interesting Facts About Umbrella Liability
- It may also cover lost wages due to court proceedings
- It protects you even outside of the country
- It can extend to all members of your immediate family
Purchasing an Umbrella Policy
The protection offered by an umbrella policy is important to insure financial stability. In the event of a liability claim, assets can be seized including college and retirement funds. Certain lifestyle choices can also increase your risk of accidents on your property or through your vehicle.