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What is Personal Liability Umbrella Insurance?

By: John Hoefer

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Many people do not even know what a personal liability umbrella insurance policy is, while most people actually need one. Although inflation has increased the cost of many things, unfortunately most people have not increased their protection against lawsuits to keep up with it. A personal liability umbrella insurance policy can help you in a variety of ways to help better protect yourself.
So what is a personal liability umbrella insurance policy? Simply put, it is an “umbrella” of liability protection, usually sold in million dollar increments, to go over top of your underlying insurance. For most people, this is an umbrella over their underlying auto and homeowners insurance. So if you had a liability claim on either your home or auto that exceeded your policies coverage, the umbrella policy would kick in to pay legal expenses and lawsuit damages awarded to the other party.
For example, if someone was severely injured while at your home and your homeowners policy only provided $100,000 of liability coverage, if the person was awarded $500,000 as a payment for damages, your homeowners would pay the first $100,000 and the umbrella policy would provide the additional $400,000 that would be necessary for you not to have to pay the claim out of pocket.
Although large claims may seem few and far between, most claim awards are several hundreds of thousands of dollars going into the millions. It may not seem worth it initially to pay out of pocket annually for a policy, personal liability umbrella policies are extremely inexpensive for the amount of coverage that you get. Usually these policies are only a few hundred dollars per year. Of course, if you have liability exposure that is extreme (like teenage drivers, for instance) your cost may be higher as it is rated on your risk. But no matter what, the low cost is certainly worth the extra protection in the lawsuit-happy world that we currently live in.
People often question why they personally need an umbrella policy. Besides the simple fact that your underlying protection is usually antiquated and at a very low limit, there are many other things that may trigger your insurance agent to recommend an umbrella. Many people now have pools and trampolines on their properties. This added exposure, especially if you have children, is enough to result in the need for an umbrella policy. For those homeowners that have dogs, there is the added risk of dog bites to your need for extra liability. Many people who have teenage drivers also have the need for added protection because teenagers unfortunately run a higher risk of traffic accidents.
Even if you do not have children, it is important to recognize that even people who come onto your property without your knowledge can file a claim against you if they are accidentally injured on your property. It is important to realize that as careful as you may be, you still have a liability risk that would encourage the need for an umbrella policy. Speak to your local insurance agent if you feel you may have the need for a personal liability umbrella insurance policy to help advise you on your liability needs.

Article Source: http://depositarticles.com/

John Hoefer is the insurance expert at Milestone Risk Management & Insurance Services. 8 Corporate Park, Suite 130, Irvine, CA 92606 888-459-4694 www.milestonepromise.com

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