An umbrella insurance policy is a worldwide liability policy that covers you and your family members over and above your primary insurance policies, including the policies you hold for your automobiles, home, rental properties, and even boats or campers.
Many of my clients believe that only millionaires need this coverage. Unfortunately, this is a gross misconception. Many people can benefit from umbrella policies.
If you are sued and then found liable, and if you do not have enough liability on your primary policies to cover the judgment against you, any assets or property that you own will be put towards the settlement—unless you have an umbrella policy.
Frequently, when I give this simple explanation, I am told, “I do not own anything nor do I have any money in the bank for anyone to take.”
Here are the questions I then ask:
At least one of these questions likely has a yes answer.
This means a lien can be put on your salary, disability benefits, 401(k), or any future salary you may earn, or you may be forced to sell any or all of your property or your spouse’s property to pay for the judgment against you.
Additionally, many people forget about legal fees. Sometimes the attorney and investigation fees are more than the final judgment awarded. These fees can exhaust the primary liability limits on your policy very quickly.
If these facts don’t alarm you into calling your agent to discuss purchasing an umbrella policy, let’s examine some examples to make it even clearer:
Bear in mind that not every umbrella policy is the same. Does your umbrella policy cover legal fees inside the limit on the policy or outside? Do you sit on a board of directors? Do you own a personal watercraft or ATV? Unless you have underlying coverage, your answers to these questions may mean that your umbrella policy excludes coverage.
Call your insurance agent today to get clarification and more information on this very important coverage so you can protect the assets and property you have worked so hard to earn and grow.
Heidi Petschauer Fox graduated from St. John’s University in Queens, N.Y., in 1983 with a B.S. in management. She joined her late father’s firm, Petschauer Insurance, in 1982, became principal in 1995, and now shares ownership with her partner and cousin, Erwin Petschauer. She received her Certified Insurance Counselor (CIC) designation in 1997. She currently facilitates the professional and creative development of the entire Petschauer team and manages the personal lines and social media departments.
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