Umbrella liability coverage is insurance that is available to protect you and your possessions in addition to your auto liability coverage and your homeowner’s/renter’s liability coverage. This type of coverage comes into play if you cause a car wreck that badly injures someone or even kills someone, or if through your own negligence injure someone badly in your home (or in any way not covered by auto liability coverage). Should any of that happen, you will find yourself in a thunder and lighting storm of stress and potential financial ruin.
In general, who needs umbrella coverage? The short answer is that if you have significant assets, you should consider umbrella coverage. Many financial experts suggest carrying roughly the same amount of liability coverage as you have in assets. So, if your total net worth is $25,000 or less, you probably don’t need umbrella coverage. But, for example, if you are married with a dual income, have a house, retirement accounts, savings and/or investments, there is a good chance you should consider umbrella coverage to protect your family from potential financial ruin.
Umbrella insurance comes in two types: liability and underinsured/uninsured motorist (UM) coverage. Simply put, liability coverage is money that your insurance policy will pay to someone that you harm; UM coverage is money that your insurance company will pay to you if someone harms you and has no or insufficient liability coverage to compensate you for your loss.
At Link & Smith, P.C., we strongly suggest that our clients, friends and family consider their individual situations and whether umbrella coverage makes sense for them.
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