By Megan Cooney, Marketing Assistant
Just like everything in life, insurance coverage has its limit. However, when you reach the limits of your homeowners ($500,000) and auto ($250,000-$500,000) policies, the aftermath can be extremely costly. An umbrella policy provides additional liability coverage that goes beyond the limits of your primary insurance policies.
“The purpose of an umbrella policy is to protect your net worth,” said Celeste Fifield, Personal Lines Account Representative at McGrath Insurance. “With the possibility of a lawsuit exceeding your policy limits, you need to ask yourself, ‘How can I protect my net worth?’”
In a world where lawsuits are becoming more frequent, ask yourself what is at risk. What do you have to lose? Your house, personal property, investments, and even the money in your savings and checking accounts are all at risk when a lawsuit exceeds your policy limits. Depending on where you live, upwards of half of your future wages could be attached to paying off a potential lawsuit.
“And with an umbrella policy, you get a lot of coverage for a little money,” Celeste said. For example, the cost of a $1 million umbrella policy for a customer that owns four automobiles, one house, one single-family rental home, and one two-family rental home is $281. For that same customer, with coverage increased to $5 million, the cost of the policy is $800. On average, the cost for a one home, one auto umbrella policy is around $185 for $1 million in coverage.
There are different types of umbrella policies that are subject to their own coverage and exclusions. A follow-form umbrella is the most common, and abides by the terms and exclusions written into your primary homeowners and auto policies. This coverage is typically written with the same carrier as your primary policies. There is also a true umbrella policy. This policy has the potential to offer more coverage, depending on the policies written terms and conditions.
Expect the unexpected. In the event you find yourself paying off a claim, ask yourself if you’ve done everything you can to protect yourself and your assets. For more information on a personal umbrella policy, contact McGrath Insurance Group at 800-342-3859.
*This article is written for informational purposes only and should not be construed as providing legal advice.