Umbrella Insurance | Rosenberg & Company

YOU THINK IT IS NEVER GOING TO HAPPEN to you, and then? Someone is seriously injured on your property or while you are driving. The injured person sues you and is awarded millions of dollars. Your homeowners or auto insurance policy will fully cover the judgment, right? Wrong! Primary insurance policies, such as homeowners, auto, and boat, generally limit liability coverage to $100,000, $300,000, or $500,000. If a judgment exceeds your liability coverage, you are on the hook for the balance.

Fortunately, there is a type of insurance?personal umbrella insurance?that can help protect you by providing extra liability coverage if a judgment exceeds the limit on your primary policy.

Here?s generally how it works. Let?s say the liability coverage on your auto insur- ance policy is limited to $300,000 and you have a $5 million personal umbrella policy. If the injured person is awarded, say, $2 million, your auto policy picks up the first $300,000, less any deductible you may owe. Your umbrella policy picks up the remaining $1,700,000. Without the umbrella policy, you would have to pay the remaining judgment from your assets and perhaps your future earnings.

In addition to providing extra liability coverage, an umbrella policy generally of- fers broader coverage than your primary insurance policies. For example, a personal umbrella policy will generally pay the legal fees you incur in the lawsuit, up to the limit of your coverage. These fees can be substantial even if you win the case. A personal umbrella policy may also cover claims for libel, slander, or defamation of character, as well as provide coverage anywhere in the world.

It is a good idea to review your insurance policies every year or so. If your current liability coverage is not sufficient to protect your assets and income, talk to your finan- cial advisor about extending your coverage with a personal umbrella policy. Commercial umbrella policies are also available for businesses.

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Source: http://www.rosenbergcpa.com/wordpress/2013/01/02/umbrella-insurance-helps-cover-you-on-the-rainiest-days/

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