Who needs to purchase an umbrella liability policy?

Have you ever thought about the risk of being sued? The risk is much higher than most people think. Each year in the United States, there are more than 15 million civil cases, or about one court case for every 20 people. But don't let this stat scare you. There is a way to protect your home, your family, and your bank account in the event of a lawsuit against you or someone in your household. Umbrella insurance is the best way to know that you'll be covered in the event of a lawsuit.

What does umbrella insurance do?

Umbrella insurance can be considered an extension of any other insurance policy you have. In case you need to file a claim for home, car or other insurance, your civil liability umbrella insurance would step in if the initial policy ran out. For example, if your dog attacks a guest in your home and $300,000 is needed for medical treatment, you would be responsible for paying it. If you have liability coverage up to $250,000, your homeowner's insurance would cover that amount and your umbrella general liability insurance would cover the other $50,000. If you did not have umbrella insurance, you would have to pay the other $50,000 out of pocket. Umbrella insurance prevents you from incurring important expenses that result from situations like these, in which you are legally at fault.

Who should have umbrella insurance?

There really isn't a definitive answer to this question. The best way to decide if you need umbrella insurance is to consider the possibility of you or someone in your family being sued. Lawsuits are common if someone in your household is at fault for a serious car accident; more than half of all civil court cases in the United States are related to car accidents. You can also be sued if a guest or stranger is injured on your property, even if you deliberately caused them harm. To determine your risk, you might ask yourself some of the following questions:

• How many vehicles and drivers are in the household?
• How many drivers are under 21 years of age?
• Do they tend to have accidents?
• How many properties do you own or rent?
• Do you have a pool?
• Do you have a dog? What race? Is it territorial?

Of course, you can never predict the future, but it is always better to be safe than sorry, especially when it comes to risking thousands of dollars or more. Never bet that your defense attorney will be able to save you every time and every time. It is prudent to have an umbrella insurance policy due to the high volume of civil court cases and the quality of public defense.

Is umbrella insurance worth the cost?

Typical umbrella insurance costs between $150 and $300 per year for a million-dollar policy. It may sound like a lot, but it's not when you compare it to the cost of a major lawsuit. A lawsuit could cost much more than your auto or home insurance covers, and you will be responsible for legal fees and damages. If you can't pay out of pocket, steps like garnishment of your wages or withholding from your future paychecks may be taken to make you pay for the damages owed. This can be detrimental, especially if you have a family that you need to feed and support.

A million-dollar umbrella liability insurance policy is not as excessive as it seems. When you consider the cost of lawyers, medical treatments, or car repairs, it might almost seem insufficient. For the vast majority of people, paying these out-of-pocket costs would place a great deal of financial pressure, and just saving a few hundred dollars a year is not worth taking that risk. If you value the safety and peace of mind of your family, an umbrella insurance policy is worth it.