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Insurance Strategies
Coverage Above and Beyond
by Rick Willoughby (Write for us!)
(Click on the links within the article to get definition of that word)
Pool, Pooch, and Porsche
Is there a swimming pool or trampoline in your backyard? Do you have teenagers who drive? Do you entertain frequently or own a dog? Does your lifestyle communicate to others that you might have significant assets? These are some indications that you might be a good candidate for an umbrella policy.
Umbrella liability insurance works as a backup policy if the limits of your primary insurance coverage are ever exhausted. The issuing company typically will require you to purchase the
maximum coverage available on your home and auto policies, which serve as a type of deductible for the umbrella policy. If a claim or judgment against you ever exceeds the limits on the underlying policies, the umbrella policy would pay the difference, up to the policy limit.
Many insurance companiesoffer umbrella policies in $1 million increments, and a few companies offer up to $100 million coverage for high-net-worth individuals. Most people can expect to pay a few hundred dollars a year for a $1 million policy.² The appropriate amount of coverage for your situation will depend on personal factors.
If someone were injured on your property or by your vehicle and your financialresponsibility exceeded your insurance coverage, it would be disastrous to have to sell your home or use a portion of your future earnings to pay the balance. By putting an umbrella policy in place, you may be able to avoid dipping into your personal assets to pay a large judgment.
1-2 The Baltimore Sun, April 24, 2005 (most recent figures available)
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