Your financial security is important to you. That is why you have insurance in the first place. You do not want anything like a car wreck, house fire or break-in to damage or destroy your property. However, one financial challenge that many people do not think about is what would happen if they were at fault for harm done to someone else. What if that person sued you for your losses? It is easy to assume that the affected person might demand compensation, or worse, sue you for their losses.
At this time, the liability insurance provided by your home, auto, boat, renters or other personal insurance policy can help you cover these third-party losses. Still, liability insurance will have its maximum limits, but there is no guarantee that a claim will stay within them. That is why even your liability insurance needs the extra support provided by an umbrella liability policy. This is dynamic, customizable coverage that can protect anyone from the excess liabilities that might threaten them at any time.
The Basics of Umbrella Insurance
When you cause someone else to sustain harm of any kind, then it is your responsibility to pay for it, both ethically and legally. But doing so might cost you quite a lot of money that you might not even have. That is why most personal insurance policies—auto, home, renters, boat—have liability insurance attached. It is there to help you compensate others for the problems you caused them.
Yet, all liability policies have limits that state the maximum amount of money they will pay out on your behalf. If a claim exceeds this value, then you will have to pay the difference between the maximum limit and the claim amount. This could still cause you to struggle financially.
Still, if you make the investment in an umbrella liability policy, then you will gain significant added protection against high liability claims. These policies are designed to pay once your standard liability coverage pays to its maximum limits. Therefore, they can significantly lessen your personal financial burden following liability lawsuits.
Scenarios Where Umbrella Insurance Will Help You
The interesting thing about an umbrella liability policy is that it will not apply just to one plan. Instead, with one umbrella policy, you can extend coverage to your homeowners, auto or any other personal policy at once.
Therefore, the umbrella policy is designed to cover many potential liability scenarios. Consider just a few of these:
Swimming Pool Liabilities
Owning a swimming pool creates a higher level of safety risks and liabilities for any homeowner. You do not have to guess just how devastating a swimming accident could be. If something were to happen to someone like a friend or neighbor while they were using your pool, then you will often be responsible for paying for their injury costs, which could be very severe.
Pet Bite Liabilities
When you have a pet, you must realize that man’s best friend is still a liability. Though your pet might be a loving, sociable friend 99% of the time, it is the other 1% of the time when their wild instincts might kick in. Pets do not have the ability to control themselves, so if they lash out and bite someone or damage their property, then it is going to be the owner’s responsibility to cover the damage costs. While some standard homeowners liability policies might cover these situations, others might not. Therefore, umbrella coverage might be the simplest way you can get this essential benefit.
Severe Car Accidents
North Carolina requires all drivers to carry auto liability insurance. It will help you pay for the injuries or property damage that you do to others when a wreck is your fault. There are many scenarios where a severe wreck might lead to excessive liability claims that easily outweigh even the maximum liability benefits available from your auto insurer.
Suppose for example that a wreck injures multiple people. Your bodily injury liability coverage will only pay a certain amount of money per person and per accident. Therefore, the more people who get injured, and the more severe those injuries are, the better your chances of exceeding your liability insurance limits.
Or perhaps you have an accident that involves multiple vehicles, high-value vehicles or an awfully expensive piece of property. In these cases, the property damage liability coverage on your auto insurance might not cover the full cost of repairs for the other parties. Still, a claim against your umbrella liability insurance can help you get the assistance that will minimize the financial blow on your wallet.
Overall, the benefits of umbrella liability insurance far outweigh the costs, and plans are both affordable and customizable to the individual consumer’s needs. Here at Maranatha Tax & Insurance Agency, we are committed to helping every client purchase and implement this critical piece of protection, so that you never have to worry about how you will afford the costs of particularly severe accidents.