When life doesn’t go your way, it’s nice to know insurance has your back. Some incidents, however, are even too big for a typical insurance policy, potentially putting your financial future and assets at risk. Umbrella insurance is back-up coverage for major liabilities that exhaust the limits of your primary insurance coverage. It can help you weather an expensive lawsuit, including legal fees and large judgments or settlements, all with little or no out-of-pocket cost to you. With the right policy from Long & Company, you can rest easy knowing you are covered far beyond the limits of your standard homeowners, renters, or auto accident liability insurance.
How Umbrella Insurance Works
Personal umbrella insurance is designed to kick in only when you have exhausted other insurance coverage options. It essentially extends the limits of existing liability coverage, whether you are filing a claim against your homeowner’s liability insurance for a serious guest injury at your home or against your auto insurance for an at-fault accident in which you caused serious injury to another driver. It does not cover your own personal property damages or injuries.
When an incident occurs, your primary insurance policy is your first line of defense. Once your costs exceed the value of that coverage, umbrella insurance begins to pay for excess damages – money you might otherwise have had to pay out of pocket without a supplemental liability policy.
In some cases, there is no primary liability insurance to file a claim against. In these cases, umbrella insurance may become the primary coverage and help pay for losses that are not covered by other types of insurance. Examples include rental damages you are responsible for when traveling abroad, liability incurred from a rental property you own, or accusations of slander, defamation, or libel.
As with nearly all insurance policies, there are also exclusions. Some types of liabilities are not covered by umbrella insurance, such as those you incur with intent. You cannot expect the insurance company to pay a claim for damages you cause as a result of a malicious or illegal act. At Long & Company, we can help you better understand what is covered by your umbrella policy, as well as what is not.
When Would an Umbrella Policy be Useful?
The types of scenarios that require umbrella insurance are not as common as run-of-the-mill fender benders, but when they do occur, umbrella insurance can mean the difference between maintaining or losing your financial solvency. These are usually extreme events – the type in which someone causes major and extensive property damage or causes one or more life-altering injuries. They are losses that exceed the typical $250,000 to $500,000 maximum liability caps available on other types of traditional insurance policies.
For example, imagine a scenario in which a parent lets his 17-year old take a road trip for spring break. Despite being a well-behaved, straight-A student, he makes a poor judgment about his driving abilities. He becomes drowsy after 8 hours behind the wheel and falls asleep, causing an accident on the Interstate. The collision kills 1 person and seriously injures others. It also destroys the victim’s car and results in guardrail damages. The parent is sued for the damages his teen driver caused, which total millions of dollars. Car insurance pays only a few hundred thousand dollars, leaving a large balance owed. Fortunately, the parent also owns a $3 million umbrella insurance policy, which is more than enough to supplement the outstanding costs of litigation, property damages, and injury settlements. Without it, the damages may have resulted in the liquidation of assets, garnishment of future income, and perhaps even total bankruptcy.
Of course, this is just one example of how umbrella insurance can work. However, it can cover much more than just car accidents. From slanderous statements your child makes on social media to injuries your dog causes, to damages caused by an intoxicated guest after leaving your home, umbrella policies can cover a wide range of potential liabilities.
Talk to an Agent About Umbrella Benefits
No one can help you better understand umbrella insurance quite like your independent insurance agent. At Long & Company, we help educate clients about the importance of adequate liability protection – even if you would not consider yourself ‘rich.’ The truth is that umbrella insurance is right for many people, including those who might consider themselves a typical, middle-class home. That is because liability is not contingent upon how much money you have – it’s contingent upon what you owe. If you cannot afford to pay a settlement or judgment in one lump sum, you may still be able to liquidate some assets or make payments from future wages until the debt is paid. Even a college student with no money and saddled with student loan debt has a lot to lose in the form of future income.
We typically recommend umbrella insurance to individuals who wish to protect their financial future. This can include people who:
- Have extensive savings
- Have future earning potential
- Own real estate properties (besides a primary home)
- Travel internationally
- Expect to receive an inheritance
- And more
To qualify for umbrella insurance, you may first need a minimum amount of liability protection on your primary insurance policies. If your current limits are too low, talk to an agent at our office about how you can raise those limits to qualify for umbrella coverage.
Get a Customized Wisconsin Umbrella Insurance Quote from Long & Company
At Long & Company, we offer personal umbrella policies with as much as $1 million to $5 million in coverage. We can help you decide how much coverage may be right to fit your needs and financial goals for the future. We can also help you shop and compare policies from multiple insurers, often finding policies with premiums as low as $150 to $300 per year.
For more information about Wisconsin umbrella insurance or to request your personalized quotes, contact our office today.