I was working with a new client recently and one of my recommendations was to secure an umbrella policy. It’s probably the least thought about coverage for the average person or family, but one that should not be overlooked.
What is Umbrella Insurance?
In simplest terms, it’s a policy that protects you over and above other forms of liability coverages, like your auto and homeowners. These latter policies are your raincoat, the umbrella policy is, well, your umbrella, for when the raincoat just doesn’t get the job done.
Umbrella policies do not stand alone. They offer excess protection only after your underlying liability limits are exhausted and this makes them relatively inexpensive.
What are you trying to protect?
You are protecting all of your hard earned personal assets. You are potentially even protecting your future income stream.
Don’t assume that because you have auto insurance that a claim can’t be brought against you personally above and beyond your limits if you are deemed at fault and injuries are significant. And this would include anyone driving your car – your nanny, teenage child or anyone your teenage child might let borrow the car that you don’t even know about.
Who Should Have an Umbrella Policy?
Personally, I think anyone who owns a home or car should also carry umbrella insurance. I already gave an “anything can happen” car scenario above.
Liability coverage for homeowner’s insurance works a little differently. You don’t actually have to be “at fault” for what happened, but if it happened on your property, you are liable for the damages. So again, at fault? Not necessarily. But responsible for injury that occurred on your property? Yes, absolutely.
Think trampolines, swimming pools, icy walkways or nasty dogs. Think teenagers drinking in your home when you’re not around. Think Amazon driver falling down your front steps while being chased by your dog and subsequently falling into the swimming pool and getting a concussion and no more packages can be delivered to you ever again (which is the real tragedy) – not likely, but thought I’d add a little humor.
Protecting our family or assets is never a fun topic because it makes us think about yucky “what-if’s” that we’d rather not think about.
The chances of you ever needing it are relatively small, but securing this inexpensive coverage could absolutely save you from financial ruin in the event of unforeseen circumstances.
I know which side of that coin I’d want to land on.
In a conversation with my 13 year old earlier today, I was trying to explain to him the concept of the self-fulfilling prophecy. I’m a BIG believer, so here is one we’ve all heard but is always a good reminder:
“Whether you think you can or think you can’t – you’re right.” -Henry Ford