Scenario 1: You and your family of four are driving home after a Saturday afternoon college football game. There is a drunken tailgater behind you, driving three other tailgaters home. Traffic suddenly backs up on the interstate. You have to slam your brakes to stop. The tailgater behind you fails to stop, rear-ending you from behind at 70 miles per hour. You break a leg, and two of your children also suffer broken bones. All three passengers in the tailgaters vehicle suffer substantial injuries. The drunken tailgater only has state minimum insurance (up to $50,000 in coverage), and your underinsured motorist coverage (up to $300,000) is not high enough to compensate your family for the injuries.
Scenario 2: You get into an argument with a neighbor in front of a crowd of people at a community cookout. The neighbor is irate and sues you for defamation. You need to hire an attorney, but you dont have the money to do so.
Scenario 3: You are re-modeling your home. A friend and their rambunctious 10 year old come to visit. You forget to tell the parent that one of the stairs is being repaired. The 10 year trips down the stairs. He suffers three broken bones and a concussion. He requires several surgeries and suffers post-concussion syndrome. Your friends do not have health insurance.
What do all of these devastating scenarios have in common? They may invoke an umbrella policy.
Umbrella policies are extra insurance policies that essentially cover you for expenses too high for or outside the scope of your regular insurance policies. Like the name implies, it acts as an umbrella. The policies provide extra protection for your family and others in case of a horrific accident or bad situation.
You are protected only up to the amount of your insurance. If you have only a hundred thousand dollars ($100,000) in automobile insurance coverage, and you cause an accident that seriously injures someone, $100,000 may not be enough to compensate. You may get sued, and the person you hit may attempt to take your personal assets.
Umbrella policies are usually an extra $200-$600 per year, and they are sold in increments of one million dollars ($1,000,000) or more. Additionally, the policies get significantly cheaper the more coverage that you buy, since statistically, it becomes less likely you would ever need the amount of funds you purchase.
Terrible things happen to wonderful people every day. Make sure you protect your family, your assets, and your financial future. An umbrella policy is one of the most cost effective ways to protect yourself, your family, and your assets in the event of an unfortunate situation.