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Why you should have an umbrella policy.

What is an Umbrella Policy?

umbrella-insurance

Protect all your assets from costly lawsuits and settlements with an umbrella insurance policy. This supplemental insurance provides additional coverage on top of current insurance policies you have if you’re involved in a car accident, someone injures themselves in your home or business, or for other incidents involving you, your business, or your property. Most insurance companies sell these policies in conjunction with homeowner, business, and vehicle insurance. Even though you think you have enough coverage from standard insurance policies, legal fees and settlement fees can easily cost more than the coverage you currently have.

What Does Umbrella Insurance Protect?

According to the National Highway Safety Traffic Administration, motor vehicle accidents cost about $871 billion each year. The average cost of a home injury that results in death is over one million dollars, while a work related injury can cost around $60,000. In addition to paying medical expenses, emergency care, recovery and rehabilitation, surgery, and loss of wages you may also be liable for legal and court fees, settlements, and repairs to vehicles and equipment. If current insurance policies don’t cover these costs, you will have to pay out-of-pocket.

Umbrella insurance helps protect additional assets such as your home, retirement and investment accounts, and other investments so you don’t have to sell off these assets to pay settlements and fees. Unfortunately, if you can’t pay settlement or legal fees using funds from your savings account (most average people can’t), you will have to find other ways to raise this money. Courts have the right to compel you to sell off property and other assets to meet your financial obligations.

Who Needs Umbrella Insurance?
Most people should consider umbrella insurance in addition to other insurance policies. Homeowners, for example, could be held liable for medical bills and other costs if friends, family members, workers, and others injure themselves or die while on the property. Business owners, in addition to purchasing business liability and worker’s compensation insurance, should add umbrella insurance to cover injuries and accidents that occur at the workplace, on the jobsite, or during travel.

Even if you don’t own a home or a business, purchase umbrella insurance when buying car insurance to protect yourself in the event of an accident considered legally your fault or you will bear the financial responsibility of paying for medical expenses, lose of wages, legal fees (yours and the people involved), along with any additional settlements. Most car insurance policies simply do not cover all of these expenses.

How Much Umbrella Insurance Should I Buy?

Luckily, umbrella insurance policies are reasonably priced. Most insurance companies offer policies with coverage starting at one million dollars, with additional coverage options of five million dollars and 10 million dollars. Purchase a policy of at least $1 million if you’re a homeowner or car owner. Business owners should review total assets and current insurance coverage to determine an amount that provides comprehensive coverage. You can always increase or decrease the amount of policy as your assets change.

Other instances where an umbrella insurance policy can protect you include driving overseas, renting out personal or commercial property, vehicles, or equipment, hiring contractors, and carpooling with friends, family, and coworkers.

The Bottom Line: Protect Your Assets
Hopefully, as with any other insurance policy, you’ll never need to use it. Make sure to renew your policy each year so the policy remains current. When looking for umbrella coverage, shop around to find the company with the best coverage options and rates. Most companies offer discounts when purchasing multiple policies, so ask about umbrella insurance when it’s time to renew your homeowners, vehicle, and business policies. Having enough protection against unfortunate accidents can give you peace of mind and additional financial security in the event of an accident or injury that you’re held legally liable for.

For more information contact TCIA at 303-868-6272 or mark@tciai.com.

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