Most people have heard about umbrella policy coverage but many do not know exactly what it is. Basically it is a specific type of insurance that is designed to start providing coverage and benefits once a person’s homeowner’s or automotive insurance has been capped out (depending upon the nature of the claim). Typically, umbrella coverage is thought of as something only for the very wealthy but this is not actually true. Umbrella policy insurance coverage can be important for middle income earners as well depending upon the circumstances. Following are five signs that indicate that an umbrella policy may be something that you need.
#1 – You Own A Home
Yes, it really can be that simple and straightforward. No matter what the situation and even if you are completely innocent, there is nothing that can stop another person from pursuing damages and a lawsuit against you. This also means that your home could be at risk if such action were to take place. While the law is intended to protect, there are some times when it does not always feel fair and if you want to be assured that your home will remain safe in a lawsuit situation, having an umbrella policy is one of the best—and least expensive—ways to do so.
#2 – You Have A Combined Household Income of More Than $100,000 Per Year
A generation or two ago, having a combined household income of $100,000 would easily have put someone in the category of “the wealthy” but today a home with two full-time wage earners can find that an annual combined income of $100,000 is only upper middle class at best, depending on what part of the country they live in. Nonetheless, the six figure threshold is still a benchmark to many and can mean the difference between someone being willing to sue another party for additional damages or not. It essentially comes down to whether or not the alleged injured party believes there is anything to be gained from pursing additional legal action (which typically means financial payouts) or not. If you have an income beyond $100,000 per year, an umbrella policy would prevent your home or other assets from being able to be part of a larger settlement or lawsuit.
#3 – You Have A Pool, Trampoline Or Other High-Risk Feature On Your Property
When you have features on your property that naturally increase the risk of injury for you or any other party, you have an inherent heightened risk of being sued for those resulting injuries. Pools, trampolines and ATVs are just some examples of the type of equipment that may signal a flag for you to investigate a good umbrella policy. This really is no different than the logic applied in life insurance policy premiums. If an applicant is an avid hang glider, for example, his or her life insurance rates are likely to be higher than a person with comparable health and lifestyle habits that does not engage in hang gliding. This is because there is, quite frankly, a higher likelihood of a problem occuring when certain activities take place and insurance companies look to protect themselves from that.
#4 – You Entertain Or Have People Working On Your Property Frequently
It is always a wonderful thing to be the home where people love to congregate. However, the more often you have people at your home, be it for fun or for work, the greater the chance that a problem may occur, including some form of an injury. With this increased risk in mind, you should give serious consideration to investing in a good umbrella policy to protect your assets in case that someone should be injured when at your home.
#5 – You Have New Drivers In Your Home Or Family
This should be a fairly simple concept for people to understand—a new driver is typically a less safe driver and, therefore, the risk of an accident is greater. This is due to the combination of inexperience as well as a youthful lack of caution. Automotive insurance companies charge a higher premium rate for young drivers, especially young male drivers, because it is a known fact that the accident rate is higher for this group. Armed with this knowledge, it is prudent for you to protect yourself and your assets with an umbrella policy if you are in the situation of having a young driver in your home.
Do your research and you will find that umbrella policies are relatively inexpensive, especially for the value and protection they deliver if ever needed. If you determine that an umbrella policy is right for you, you will breathe easier knowing that you, your family and your assets are more fully protected.