There are many different types of insurance, from car insurance to homeowner’s, tenant’s, and more. It’s pretty easy to tell from their names what exactly these types of insurances are designed to give you coverage for. But what about umbrella insurance?
This is a term that is not a widely understood, but it might be an important part of the protection and security you put in place for yourself and your family with the help of PA Auto Insurance Outlet.
What is umbrella insurance?
Umbrella insurance is an extra insurance that you can buy that gives you additional coverage beyond what you have in your auto and home insurance. In previous articles, we discussed what the minimum liability coverage amounts were for auto insurance, and the fact that you can buy a policy that covers you for more than the state minimum requirement. Similarly, you can buy a homeowner’s insurance policy that has a very high level of liability coverage.
But what happens if you are involved in a lawsuit following a vehicle accident, or someone getting hurt on your property, and there is a settlement against you for more than the amount that your insurance covers?
In cases like this, all of your assets—including your home—could be at risk. Umbrella coverage was designed to pick up where your auto or homeowner’s coverage stops, to fill in the gap between what is covered by those policies and what you might be required to pay in damages if there is a judgement against you. Umbrella insurance only kicks in after your auto insurance or homeowner’s insurance policy’s coverage is used up.
How do you know if you need umbrella insurance?
Nowadays, lawsuits are filed more often than they were in the past, and the judgements that are awarded can be very large. If you are sued and the court awards damages to the person who sued you, your auto or homeowner’s insurance may not be enough to cover the damages. If that happens, your assets are at risk, and chances are that your greatest asset is your home. The court has the power to seize your assets to pay for damages if the money from your insurance runs out.
The best way to decide if you need umbrella insurance is to have an open and honest conversation with your insurance broker at PA Auto Insurance Outlet. You should of course discuss exactly how much coverage you have in your policies, but you should also discuss how much you have in assets to determine what could be at risk.
How do you estimate your assets?
When you put all of your assets together and total them up, you come up with an amount that is called your net worth. Some of the assets that go into totaling your net worth are obvious, like your house, your car, and anything you own that is of monetary value like jewelry or technology. Other pieces of your net worth are not as obvious, like your savings and even your investments.
One thing that takes a lot of people by surprise is that their net worth doesn’t just include the assets they have now, but it also includes their future earnings. That means that you can be sued not just for the money you have already made, but for the money you will make in the future!
When you put all of this together, most people discover that they have a higher net worth than they thought they did, and that means that they have more to lose in a lawsuit than they thought they did.
How big an umbrella do you need?
If in talking with your insurance broker you decide that umbrella insurance is right for you, you can buy it in increments. Umbrella coverage is generally available in increments of $1 million, and your broker at PA Auto Insurance Outlet can help you figure out how much coverage is best for your circumstances.
If you want to make sure that you have all the coverage you need to protect your assets—and do it at the lowest rate possible—give PA Auto Insurance Outlet a call today and talk with one of our expert brokers!