However, that’s a side dish to the important factor that virtually no one talks about when they talk about umbrella insurance and/or lawsuits, and boy it’s a whopper! If you have any of those things, you have more than enough to protect with an umbrella policy. Your house, your car, your electronics, everything and anything. To a court, assets are literally anything that can be liquified into cash. If I don’t have anything to protect, why do I need insurance?”īefore I get into the point of this article, where most people are wrong here is they think of assets as money in the bank, investment accounts, etc. The knee-jerk reply here from most people who don’t fully understand it is likely, “What do you mean? You can’t draw blood from a stone. Umbrella insurance is necessary for everyone, including people who don’t have assets. While not totally untrue, it misses an overwhelming reality in that Umbrella insurance is not just for people with assets. That is as misleading a statement as there ever was when it comes to explaining umbrella insurance. “Umbrella policies are for people with assets” There’s no harm in that, but the next piece of advice is where a lot of people are wrong. Most of the time these types of answers are given to simplify a product that can actually be quite complex and confusing to the average consumer. “You definitely want one if you have a swimming pool” “It goes above and beyond your current policies” “It’s an extension of your insurance coverages” “It fits on top of your home and auto policies” When an insurance consumer asks about Umbrella coverage, you’ll most commonly hear explanations like the one I mentioned above. One thing I’ve noticed over and over again is how this extremely important coverage is presented to consumers by licensed professionals. Being in such a competitive industry, you get a chance to learn things from your peers, and how they explain certain coverages. The problem with most Umbrella insurance adviceīeing in the insurance industry as long as I have, I’ve heard many different explanations of umbrella insurance from a wide range of insurance professionals. It’s to shed some light on a serious flaw in how advice is given when it comes to Umbrella coverage. The point of this article is not to scare you with gruesome stories and unbelievable statistics, although they are a plenty. The cost of being properly insured is so minuscule in the grand scheme of things, and at the end of the day, no one is going to cut you a break if you slam into a car filled with seniors or children. The importance of Umbrella insurance should not be undervalued, especially when it comes to protecting your financial well being.Īfter all, the entire point of insurance is protect your assets right?īeing under-insured, is not only risky, but it could be considered down right foolish by those who have an in-depth understanding of financial planning, and/or risk management. You may never need to use it, but the one time you do, it could potentially save your life. Think of an Umbrella policy as a 5 gallon can of gas that you keep in the trunk of your car in case your car runs out of gas. Umbrella Insurance in Layman’s TermsĪn Umbrella policy functions as a reserve, in the event that your base coverages run out as a result of a lawsuit or claim. Was that too technical? Let’s explain that one more time, in a simpler fashion. ![]() ![]() Umbrella policies can offer purely excess protection, or, they can contain coverages that “fill in the gaps” where underlying policies have exclusions, conditions, and limitations. ![]() What is Umbrella Insurance?Īn Umbrella policy is a type of stand-alone insurance policy that you can purchase for personal, or business purposes, that offers an additional limit of coverage which extends over and above the base insurance limits offered by the underlying insurance policy. It’s called Umbrella Insurance, and I want to explain why most of the advice you hear about it is often times wrong, or misleading.īefore we get too far, let’s discuss what exactly an Umbrella policy is. So why does this matter to you? It matters a lot actually, and luckily for you, there is a super cost-effective way to protect yourself, your assets and your family from situations like these. To say that we live in a litigious society would be a gross understatement.Įvery day around the country, courts award hundreds of millions of dollars in damages to mothers, uncles, children, neighbors, business owners, and anyone else who has been financially or physically crippled at the hands of a negligent party. That means there is a lawsuit filed in our country every 2 seconds. What if I told you that there are over 15 Million lawsuits filed in our country every year? That averages out to over 41,000 lawsuits per day. Have you every wondered exactly what Umbrella Insurance was? If so, you’ve come to the right place.
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