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.
