Should You
Carry a Personal Umbrella Insurance
Policy?
When he was
in his twenties, James L. rented an apartment and carried
state minimum liability on his car insurance. The last 10
years have been good to him and he has become quite successful
financially. On the advice of his insurance agent, he raised
his auto insurance liability limits to $250,000 and his home
insurance liability to $500,000 to protect his
assets.
Over the
next five years, James' financial success had been steadily
increasing. He hadn't really given much thought to his
insurance policies for these five years. But one day he
decided to calculate the total value of all his assets. With
his home, cars, business, stocks, bonds, savings, retirement
account, etc., he discovered that he is worth 2.5 million
dollars. James realized that if he were deemed liable for an
auto accident and the damages were greater than $250,000, the
plaintiff could go after his home, business, and other assets
to recover the difference. He tried to increase the liability
limits on his auto and home but was told that he already has
the maximum limits available. James clearly needs more
coverage, so what can he do?
The solution
to James' problem is a Personal Umbrella Policy. This provides
excess liability coverage to protect people whose assets are
greater than the amount of liability coverage they can get on
their auto, home, motorcycle, and boat insurance. "Excess
liability" means that the policy pays over and above what the
underlying policies pay. So, if James can only get $250,000
for auto insurance liability, the umbrella policy will cover
anything above $250,000 up to the limits of the umbrella
policy.
Available
policy limits and legal liability issues vary from state to
state. To find out if you need an umbrella policy, contact
your local insurance agent to review your coverages and to
discuss the options that are
available.
