Umbrella Coverage 101

This article will explain how to determine if an umbrella is right to you. It will also show you how to find out how much it costs, what it covers, how affordable it can be, and how you can lose it. It is important to understand that insurance is an individual decision. Based on hundreds of customer reviews, I know that you should choose the coverage that makes you feel comfortable. Your insurance agent, estate planner, or family member might tell you how much coverage to get, but everyone is different and has a different risk tolerance.

Before making a decision, it is important to consider certain facts. How much can I lose? This question asks what assets, income, or investments might be lost in court if you are held liable for a loss.

Let’s first face the facts. Are people killed by car accidents? Are people losing their income as a result of an accident? Are auto accidents a cause of litigation? It is a resounding yes. Could this happen to you? It could happen again. This realization shows that foresight can make the difference between stability or a life filled with regret.

Litigation may be necessary if a person’s life is taken away, or they lose their ability to provide for their family. A judge or jury is responsible for determining the human life value of the deceased or injured party in litigation. This could amount to fifteen to twenty times the annual income of the victim. Ask yourself: How many people do I know who make at least fifty thousand dollars a year? What would you do if you were held liable for the amount of twenty-fold income that a judge or jury gives to the plaintiff?

My first thought is bankruptcy. Bankruptcy might be an option. Personally, I don’t see how bankruptcy benefits either the defendant or plaintiff. Your homes equity may be pursued by a judge. A judge in Utah can levy any amount above twenty thousand dollars per person. Assets are another risk. This could include personal property, money in the bank and even retirement funds. Wages are one of the most expensive consequences of a judgement. Utah’s judges can garnish up 50 percent of your wages until you pay the debt.

A liability umbrella is one of the easiest ways to protect yourself against the mentioned risks. Personal umbrellas have traditionally been between one and five million dollars in coverage. They can also be extremely affordable. My clients pay an average of seventeen dollars per month for umbrellas. You could easily cover this amount by making a few small changes to your policy. You could consider raising your deductible. This is where you let your insurance take care of the life-changing problems, and you pay the door dents or rock chips. Low deductible insurance is the most expensive. You can usually save enough money to buy a one-million dollar umbrella by raising your deductible five hundred dollars.

The umbrella does not cover your automobiles. This is a common misconception. An umbrella covers all personal liability. This would cover claims against your personal liability, your vehicle and your property. An umbrella can even provide legal representation for you up to the limits of your umbrella. My experience shows that very few people have insurance in place to safeguard themselves against major liability lawsuits. Take a moment to review your coverage. This could make the difference between a good day and a terrible life.