Umbrella Insurance: When You Need Extra Protection
Insurance is about the distribution of risk.
As an uninsured individual, you run the risk of suffering serious financial harm should you be found liable for an injury done to another person.
Put simply, if you hit someone with your car you are legally obligated to pay them for the damage you’ve caused. This is a risk, and a substantial one. The best way to mitigate this risk, however, is to put it on the shoulders of someone else. That’s where insurance comes in, it acts as those other shoulders.
Now, we insure just about everything.
You can have car insurance, boaters insurance, home owners insurance, catastrophic loss insurance, there are literally thousands of different kinds of policies on the market that can help you redistribute virtually any kind of risk.
Umbrella insurance, however, is a special type of policy for when you need to cover every base.
Generally, umbrella insurance is a policy that will come into effect once your other liability policies have been exhausted. Taking our car wreck example a step further, what happens if you hit someone and they have $30,000 worth of injuries, but you only have $25,000 in coverage?
If you have an umbrella policy, it pays the difference. This is the most obvious, and perhaps the most useful, aspect of such a policy. But it’s not the only use for an umbrella policy.
An umbrella policy might also cover a discrete issue for which you wouldn’t normally have coverage. For instance, many umbrella policies also cover things like personal liability related to claims of libel or defamation or damage done to a rental unit.
And while this is not the most common use of an umbrella policy, it is often one of the most useful aspects of such a policy.
So if you are in a situation in which you want the utmost protection from the risks of life, consider talking to an agent today about the benefit and utility of an umbrella policy.