Umbrella insurance is a policy above and beyond your normal homeowners, condominium, car, watercraft or personal insurance policy that offers you excess personal liability protection against lawsuits and other financial claims made against you. It’s considered a secondary form of insurance that is added to your primary insurance policy.
This type of insurance offers coverage for two specific situations. It protects you and your financial assets should you be involved in litigation due to property damage or injury caused to another party. And it covers the legal defense costs associated with lawsuits related to damages incurred to another party’s property or personal injuries they claim they incurred as a result of your negligence.
An umbrella liability policy is valuable not only for wealthy individuals who have built up considerable assets and investments. It is also a smart investment for those of lesser means because any court judgment against you might be sought against your future earnings and assets even if you don’t have any established assets at the time of the lawsuit judgment.
Most insurance policies that cover your place of residence, cars and other vehicles, and watercraft, have a limit on the amount of liability that they will cover in the event you are required to pay medical and rehabilitative therapy costs, as well as lost wages. Whether or not you are at fault for another party’s property damage or personal injury, in all likelihood they will file a lawsuit for damages that could eventually bankrupt you, seizing your property, assets and anything of value you have worked hard to accumulate.
A personal liability umbrella insurance policy provides you with added liability protection not covered by other forms of insurance, or when your liability ceiling in those other policies has been reached. Compared to the value of the coverage you receive, this type of insurance fits into every family’s budget. It offers policy holders the peace of mind that comes with knowing your investments, assets and even your future earnings will not be at risk should you be sued for injury or property damages.