We know all too well how litigious our society has become. And with good reason. And although we may be well-insured when it comes to homes and our lives, we often overlook the coverage we have when it comes to auto insurance.
The key word is liability. No matter how hard we try to live cautiously, no matter how much we think we are covered, the gap in coverage that most Americans overlook comes with liability as a result of an accident. Personal umbrella insurance offers coverage for that space between what we think our policy covers and what the legal system considers our responsibility.
There are no guarantees that you won't be sued. How judges and juries decide this is out of our hands. The single greatest variable is the other party: how far will the injured party chase down your financial obligation and whether the insurance company will see your fault as inconsequential.
Umbrella policies seek to bridge that gap. What umbrella policies offer is additional coverage to cover unforeseen claims that the damage you may (or may not have been at fault causing) will do to your personal financial situation. It doesn't take much.
Someone who has been in an accident knows all too well that lost wages, medical care and litigation can run into the hundreds of thousands of dollars, often creeping into the millions. Most of us unfortunately are undercovered in our typical insurance policies. Home owners insurance and auto insurance coverage are often inadequate when it comes to the escalating costs.
We might assume we have enough coverage and that the gaps are covered by other policies we may have. Chances are, if you are typical, you don't have enough to cover these outsized costs. You may have no-fault auto insurance but many states stop with the damage caused by the accident and allow injured parties the ability to sue you for personal damages incurred because of something you may or may not have done.
These policies, which can add coverage of up to a five million dollars, are often not as expensive as you may have thought. Even an already strained budget can handle the $30 to $50 extra a month to protect against losing it all. Often those judgements involve liens on your home and that can end up negatively impacting your credit scores. In some cases, the court may seize assets to cover the loss of the injured party.
It should also be noted, in cities where you have shared automobiles, the policies that come with those contracts are inadequate (covering up to $300,000. So even if your ownership in a car is shared, you may find yourself without enough insurance to cover an accident.
