When It's Raining Litigation, Reach for Your Umbrella!

Do you need an umbrella policy?

An umbrella policy is personal excess liability insurance to protect you and your family in the face of a severe accident or damages caused to another party.

Remember liability is just a fancy insurance word for your legal financial responsibility to pay for injuries and damages to other people and their property. Excess means that it provides coverage over your primary liability insurance limits in the event those primary policy limits are exhausted by a loss. Primary liability insurance includes coverages like your personal auto,
homeowners/condo, renters, personal property such as boat, motorcycle, etc. Umbrella policies usually come in million dollar increments, beginning at $1 million in liability coverage. However, they typically require you to have your primary policy liability limits increased to a certain minimum.

So how does it work?

An umbrella policy kicks into action if the injuries or damages caused exceed the current limits of your primary policy. Say, you’re deemed responsible for a serious car accident that causes $600,000 in injuries, medical bills, and lost wages. Your current personal auto policy (the “primary” policy) only has the Texas state minimum bodily injury liability limit of $60,000 per accident. You’re legally on-the-hook for the remaining $540,000.

You can be personally sued to cover the cost differences—your wages may even be garnered to pay for those injuries and damages! An umbrella policy covers the difference in instances where damages and injuries are severe, thus hopefully keeping you out of court, and facing financial burdens. It also may cover legal expenses above its own limits of liability should you unfortunately find yourself on the receiving end of a lawsuit.

If you could potentially stand to lose a significant portion of your assets in a lawsuit, including savings and investments, you might consider an umbrella policy. If you haven’t accumulated an abundance of wealth, you could be liable to pay damages with your future earnings. Even if you don’t personally engage in risky behavior, factors such as owning a pool or trampoline could expose you to a potentially costly suit.

If you’re unsure about whether or not an umbrella policy is appropriate for your current stage of life, give us a call. Our knowledgeable agents at AgPro would love to talk through any of your questions and concerns and help you make an informed decision about protecting your assets, even if that means an umbrella policy is not a good fit for you.