In a world where there are many different types of insurance—and not all are necessary—it is important to know what they are and when you need them. Umbrella insurance, for instance, is not an insurance that everyone is familiar with, but many insurance agents recommend buying it. However, you may need, or at least benefit from, umbrella insurance, so understanding it is essential. Read ahead to learn what umbrella insurance is and when you may need to get it so that you can be better prepared for your future.
What is Umbrella Insurance?
Umbrella insurance functions as a secondary type of liability insurance that tailors specifically to your personal liability. This insurance is also commonly known as excess liability insurance, and it is not a stand-alone policy. Its main purpose is to give you added protection in the event of lawsuits and claims that may be filed against you. In essence, it is an inexpensive way to guard your future financially.
This insurance only works when you have surpassed the base of your liability policy, and it protects you beyond the limits of your homeowner’s insurance policy as well as your car insurance, boat, or other personal policies.
Is Umbrella Insurance Necessary for You?
Knowing what umbrella insurance is now, you may think to yourself, “Is umbrella insurance necessary?” The answer to this question is simple: yes. The fact of the matter is that, in today’s insurance market, lawsuits are an all too common reality. Lawyers know there is money to be found in insurance suits, and the consumer suffers as a result. To add to this tricky situation, there are also frequently limits on the liability insurance that you can have from your homeowner’s, auto, and other policies. These policies will primarily cover the medical bills for an injured person, rehabilitative therapy if they should need it, and lost wages. Only after all of this has been paid does the liability insurance cover the cost of legal defense. Because of the way that it is set up, this often leaves you without sufficient funds to pay for this legal defense.
In many lawsuits, the person at fault will be left with much more to pay than they can afford. This goes beyond the legal counsel and extends into the actual payment that must be delivered to the victim. If the person at fault does not have enough funds, this could result in homes, cars, and other personal valuables being reclaimed in an attempt to gather all of the money necessary.
That is why umbrella insurance is not just a frivolous policy. It is a real insurance policy that will protect you in the event that the unthinkable happens. With umbrella insurance, you will always know that you have sufficient financial grounds to support whatever lawsuits may come your way.