We live in a litigious society, and for most families it would be financially devastating to experience a lawsuit. Want to protect your assets? An umbrella policy could provide the extra coverage you need.
What does an umbrella policy cover?
An umbrella policy provides additional liability protection. If someone sues you, this policy picks up where your homeowners or car insurance coverage leaves off. Coverage includes everything from legal fees to the settlement amounts associated with a lawsuit.
Umbrella insurance also covers litigation prompted by:
- Rental property incidents
- Malicious prosecutions or false arrests
- Defamation of character
- Damages for pain and suffering
Who needs extra coverage?
If you’re worried about keeping your existing net worth and future earnings secure, it might be worth looking into an umbrella policy. People with substantial assets often set up umbrella liability insurance to insulate themselves in the event of a lawsuit, but wealthy policyholders aren’t the only ones at risk. If you don’t have significant assets, the court can target your future earnings to pay off damages.
How much coverage do you need?
Umbrella policy premiums are relatively inexpensive compared to what it would cost to have your assets drained. But the more you have to safeguard, the larger the policy you may need.
To figure out how much coverage you need, first evaluate all savings, retirement accounts and physical property. Next, calculate what the potential loss of your future income would be. Finally, add these figures together to form an idea of your potential coverage amount.
No matter how much you have or don’t have, an umbrella policy can help you preserve your current and future wealth. Feel free to reach out if you have any questions.