How an Umbrella Policy Protects High Net Worth Individuals & Families
Insurance is protection against the unforeseen; accidents, surprises and unintentional consequences. Everyone needs insurance protection for various needs, and most states or lenders require it for items like homes and vehicles. However, the standard coverages on many policies may not be enough protection for individuals or families with a high net worth. You should consider an extra layer of protection with an Umbrella Policy from Peeples Insurance Agency to prevent losing valuable assets.
What is Covered by an Umbrella Insurance Policy?
Umbrella insurance gets its name from the broad manner of coverage it provides. Umbrella insurance is designed to cover needs that exceed the standard coverage amounts of standard policies, like auto insurance, homeowners insurance, personal liability insurance and others. When costs exceed the coverage amounts from these policies, umbrella insurance kicks in to cover the overage.
Umbrella insurance generally covers three basic needs:
- Bodily Injury Liability – injuries to others resulting in medical expenses and other liabilities, such as from a car accident, pet injury or accident in your home.
- Property Damage Liability – this is damages or loss of someone else’s property, such as vehicles, accidental damage to a home or damage caused by your child.
- Personal Liability – this typically includes lawsuits stemming from accusations of slander, libel, mental anguish, false arrest or detention and other personal affronts.
Calculating Your Umbrella Insurance Coverage Needs
Persons or families with a high net worth can need this additional coverage to help protect assets from forfeiture when standard insurance coverages are not enough to pay for the damages incurred.
Consider this example: You have auto insurance that includes $500,000 of liability insurance. You are in a car accident and are judged to be at fault. The other party is awarded a $1,500,000 settlement for damages. Without umbrella coverage, after your auto insurance policy liability coverage pays out, you are still stuck with paying $1,00,000. Umbrella coverage is designed to cover this overage so you are not forced to liquidate assets or suffer financial devastation.
Take the following steps when calculating your umbrella coverage needs:
- Examine your existing insurance policies and determine their coverages for bodily injury, property damage and personal liability.
- Calculate your assets, including homes, vehicles, real estate, investments, checking and savings accounts. You should also include your projected stream of future income for a period of years.
- Determine the gap that exists between the totals from your existing insurance policies and what it would take to protect your total asset value.
Keep in mind as you perform your calculations the following tips:
- Most insurance companies require applicants to have minimum liability coverage amounts on vehicle insurance policies, rental insurance policies and/or homeowners insurance policies before the applicant is eligible for umbrella coverage.
- A gap can occur in your coverage when your basic policies expire at different times. If allowed to expire, you could potentially face calamity because umbrella coverage only kicks in after your basic policy has paid out.
An agent with Peeples Insurance Agency can help you by reviewing your existing auto, homeowners, renters and other coverages, calculating your total asset value and shopping for the best and most affordable umbrella coverage. Contact us in Margate, Sarasota or Bradenton today for assistance or more information.