Putting together your insurance coverage is like putting together a complicated puzzle. There are a lot of different options out there, and you want to make sure you get all the coverage you need to protect you and your family against life’s unexpected twists and turns without overspending on unnecessary coverage.
In your research into the types of insurance available to you, you may have come across the concept of umbrella insurance. But unlike most other types of insurance, umbrella insurance isn’t all that self explanatory. Homeowners’ insurance insures your house. Auto insurance covers your car. Life insurance pays out in the event of a death. But what does umbrella insurance cover? Your umbrellas?
Here’s a quick rundown of what an umbrella insurance policy is and why you might need one.
The simplest explanation is that umbrella insurance covers liability issues that may not be included in your primary policy. For that reason, it’s sometimes referred to as excess liability insurance. Let’s say you’re involved in a car collision in which you are at fault, and the other car is expensive and irreparably damaged. Now let’s say the owner decides to sue you for damages and the court rules that you must pay. This is the kind of situation in which umbrella insurance might come in handy. Most auto insurance policies have built in limits to how much they will pay out in the event of a liability claim. You could end up responsible for a huge fee. But if you have umbrella insurance, it will pick up where your auto insurance leaves off and cover your damages.
Think of your umbrella insurance policy as your safety net. In the event you should encounter a lawsuit, you’ll have the reassurance of knowing that it’s there, ready to catch you and help you meet your financial obligations.
It’s true that umbrella insurance is more suited to the needs of some people than others. Most of us will never encounter a costly lawsuit, and though you can’t know for sure, you should keep in mind the idea of this coverage before purchasing it. The aim of umbrella insurance is to protect your assets, so if you have assets that need protecting, it might be a good option for you. Those with a high net worth—over $1 million—might consider umbrella insurance a wise investment.
You should also weigh the likelihood that you will be sued. Do you own risk factors such as a swimming pool, a dog, or a gun—all of which increase the likelihood that a guest will be injured? Do you spend a lot of time on the road, increasing your risk of an auto accident? Assess your risk and make your decision.
If umbrella insurance is right for you, contact your Colorado umbrella insurance provider today.