As an insurance agency, we have seen firsthand how personal umbrella insurance has become for many individuals. In today’s world, lawsuits and claims against individuals are becoming more frequent, and the monetary judgments awarded can be staggering. If you're relying solely on your standard home and auto policies, you might find yourself underinsured when you need it most.
What Is Personal Umbrella Insurance?
Personal umbrella insurance is an extra layer of liability protection that kicks in when the limits of your other policies, such as home, auto, or boat insurance, are exhausted. It helps protect you from large claims or lawsuits, covering legal fees, medical costs, and other damages for which you are found responsible.
For example, if someone is injured on your property, or you're involved in a car accident where the costs exceed your auto liability coverage, personal umbrella insurance can help cover the difference. Without it, you might have to dip into your savings or even sell assets to cover the costs.
Why Judgments Are Rising
In recent years, the size of judgments in liability cases has been on the rise. We’re seeing multi-million-dollar verdicts more frequently, due in part to increasing medical costs and broader societal trends of awarding higher compensation for pain and suffering. These "nuclear verdicts" can easily surpass the liability limits on your standard insurance policies.
In 2023 alone, several cases across the U.S. resulted in individuals facing verdicts of $1 million or more. For example, a serious car accident might lead to a lawsuit where medical costs, lost wages, and emotional distress claims can add up quickly. Without personal umbrella insurance, you're responsible for any amount that exceeds your primary insurance policy's limits.
How Much Coverage Should You Have?
Most umbrella policies start at $1 million in coverage and can go as high as $10 million or more, depending on your assets and risks. If you have significant assets, a higher coverage amount is advisable. The goal is to protect yourself against financial loss that could jeopardize your home, savings, and future earnings.
It’s important to note that personal umbrella insurance is relatively affordable compared to the coverage it provides. For a few hundred dollars a year, you could secure millions in liability protection.
Who Needs Personal Umbrella Insurance?
Anyone with assets to protect should consider personal umbrella insurance. This includes homeowners, high-net-worth individuals, or even those who simply drive a car. If you participate in activities that increase your risk, such as owning a pool or hosting large gatherings at your home, you’re at a higher risk for potential lawsuits.
With rising judgments in personal injury cases, now is the time to assess whether your current insurance coverage is enough. Personal umbrella insurance can give you peace of mind, knowing that you’re prepared for the unexpected.
In a world where lawsuits are more common and judgment amounts are rising, having personal umbrella insurance is more critical than ever. It's a cost-effective way to protect yourself, your family, and your assets from financial devastation. Don’t wait until it’s too late—talk to your insurance agent today about adding this crucial coverage to your protection plan.