So you’ve got home Insurance to protect you if anything happens to your house, and you’ve got auto Insurance to protect you on the road, now you’re covered no matter what happens, right?! Wrong. If you’re sued, and the limits of your home or auto policy are exceeded, you could be forced to pay legal judgment from your current and future earnings. Medical bills can easily exceed most auto or home policy limits, and lawyer fees can be just as costly.
Umbrella, or excess liability, coverage protects you in the event that your bills exceed the limits of your home or auto policy. For example, say your neighbor slips off your diving board and breaks his neck. Your homeowner’s liability coverage would pay the first $300,000 in damages. Your umbrella policy would cover the rest, up to the amount you purchased.
Experts recommend getting more than $1 million in umbrella coverage if you earn more than 100,000 per year or have more than $1 million in assets. This will insure that if you are forced to pay medical or lawyer bills you will be covered up to $1 million. To summarize, here are a few facts about umbrella insurance coverage:
- Provides financial protection for automobile accidents where the cost of damages exceeds the set limits of traditional insurance policies.
- Insures against losing your home, future earnings and existing investments due to an automobile accident that’s your fault
- Provides the same additional coverage limits at your home as when you are in your car
- Will generally add about 10% to your current premium rates