At one point in your life, while watching the news or surfing the web, you have likely seen photos of a multi-car pileup on the freeway, or maybe you heard a story about someone whose dog got loose and viciously attacked another person. You may have viewed the events from an outsider perspective, believing that something like that would never happen to you, but what if it did? Alongside with the emotional and physical traumas that such events bring, there is the unfortunate side effect of extreme financial loss if the party liable does not have enough insurance. Umbrella policies are designed to increase coverage above and beyond your existing underlying auto and home policies to provide you the additional protection that you need in those extreme events where you max out your liability limits.
Truthfully, everyone could benefit from an umbrella policy. Your agent may recommend one if your asset level exceeds your coverage level, but realistically, any time your liability obligations go above your coverage limits, you are going to be expected to pay for the rest. If you are the driver that causes that multi-car pileup, and you only have $500,000 of liability coverage on your policy, but have caused $1,000,000 in damages, you could be on the hook for the difference. Those who own their own business, have young drivers in the house, or have high asset levels are the most in need of an umbrella policy. If you match any of those descriptions and do not currently have an umbrella policy, you may be severely under-insured. However, as we mentioned before, anyone can find themselves in a position of being liable for more damage than your insurance policy covers, and therefore umbrella policies are beneficial to just about everyone.
An umbrella policy usually correlates to your auto or home policy. If you already have those policies with the same company, the simplest thing to do is to get your umbrella policy through them as well. Most carriers require that you have one or all of your policies through them already to purchase an umbrella policy. By having all of your policies through the same carrier, it can ensure more efficient claims handling if something did happen that caused you to exhaust your underlying policy and move onto the umbrella. Also, you will often receive a multi-policy discount by keeping the policies together under one insurer.
We already highlighted a couple of scary situations that many people can find themselves in that make an umbrella policy a necessity. You never know what could happen. Even the most cautious person in the world cannot prevent every accident from happening. Anytime you have someone visit your home, there is an opportunity for someone to get injured. You may have the sweetest dog in the world who has never harmed a person, but then one day something spooks them, and they hurt somebody. Any situation that could force you to use the liability coverage on your home and auto policies could become a situation where you need an umbrella policy.
Umbrella policies are an invaluable insurance tool that can be used to protect your assets. While we never want to imagine that the worst can happen, the truth is that it can. Ask around and you might be surprised that you do not need to go far to hear the story of someone who could have used an umbrella policy and did not have one. I bet if you asked them if they have an umbrella policy now, the answer would be a firm "yes."
Considering adding an umbrella policy to your insurance coverage? Contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your options.