Homeowners, auto and watercraft insurance policies have a limit on liability insurance. In the unfortunate event that you cause an accident, do you have enough liability insurance to cover costs if you’re sued? Today, lawsuits are everywhere, so having umbrella liability insurance is vital. An umbrella policy is designed to give an additional layer of protection above and beyond the limits on homeowners, auto and water craft policies.

Example

You have $250,000 worth of liability coverage on your auto policy. You cause a car accident, injuring two people and the damage is $400,000. Do you have $150,000 laying around to cover the difference? Probably not.  If you have an umbrella policy, this would “kick-in” when the liability on your auto policy has been exhausted.

“How likely is it that I cause an accident that causes so much damage?”

Likely. In the age of distracted driving, it’s becoming even more important to have umbrella liability coverage. And studies show that the problem will only worsen in the coming years as the number of drivers who own smart phones will increase.
While distracted driving is often discussed as the cause of accidents, it’s certainly not the only one. But distracted or not, that additional layer of protection may be essential in preserving hard-earned assets and future earnings.

“Are my kids covered?”

Say your 16-year-old is driving your car and causes an accident. Umbrella liability insurance would provide coverage to all licensed drivers listed on your auto policy.

Additional Information

Doug Dittmann provides a great description of this valuable coverage in this short video: