You likely have insurance of all types. You may have house insurance, car insurance, life insurance, or even boat insurance. These are of course, specific coverages which are limited in what they can protect you against. If you get in a car accident, your house coverage won’t do you any good. The problem is arises if you specific coverage, like your car is not sufficient. In order to address, this issue umbrella insurance was created.
Why Is It Called “Umbrella” Insurance?
Think about going out into a really bad rain storm. You will probably pull on some rain boots, maybe that’s your boat insurance. You will put on a rain coat, maybe that’s your house insurance, you put on a hat to cover your head. We’ll compare that to life insurance. Although these items will cover most of your body from the rain, it’s a good idea to bring an umbrella along. This umbrella is valuable for two reasons. First, it adds a second layer of protection against the rain. Second, it can be shifted to protect in whatever direction is needed.
What Is Umbrella Insurance?
Just like a real umbrella, umbrella insurance is the second layer of protection. If the first layer of protection is exhausted (say your car insurance coverage is not high enough) you still have a backup coverage. Not only is it extra protection, it can be applied toward any of your other coverages, if they should run out.
What Does Umbrella Insurance Cover?
In addition to adding extra coverage, umbrella insurance also protects you from things like personal liability and some lawsuits. These are the four main categories umbrella insurance covers:
- Injuries
- Property damage
- Certain types of lawsuits
- Personal liability
Under the personal liability category, things like false arrest, slander, libel, and liability coverage on your rental units will be covered by umbrella insurance.
Do I Need Umbrella Insurance?
There is some debate as to the necessity of umbrella insurance. Some believe you don’t need umbrella insurance. However, before you decide either way, think carefully about you could potentially lose. Here are three questions to help determine if you need umbrella insurance:
- Do you own a home?
- Do you own assets besides your home you do not want to lose?
- Do you own an investment portfolio or retirement account?
If the answer to those queistions is yes, then you definitely need umbrella insurance. If the answer is no, it still might be wise to have it, but you can talk it over with your insurance agent. Umbrella insurance is relatively inexpensive, with often $1,000,000 of coverage able to be purchased for a few hundred dollars annually. A light price to provide coverage and peace of mind to your assets and to strengthen your existing policies.
If you do not have umbrella insurance, you should consider getting it. It’s important to make sure you are covered to the proper extent especially, the more assets you build. If you feel unsure about how to proceed, contact us at the TJ Woods Insurance Agency and we’ll help you determine what your situation is, and determine how to best address your specific needs. Feel free to call with any questions or concerns you may have.
