I have recently had several customers ask me what an umbrella policy is and if they need one. If you have assets that you want to protect from an unexpected lawsuit, you probably need an umbrella!
Imagine driving in an unknown city at night. It is dark and rainy and you are not sure how to return to your hotel. You stop at an intersection and look in both directions while listening to the instructions on your GPS system. The traffic is free so you turn around. Unexpectedly, a drunken pedestrian steps out onto the street as you turn. You can not stop in time and beat the person. Panic sweeps over your body when you imagine the worst.
The pedestrian may ask you to pay medical bills and lost wages. If they are disabled and can no longer work due to their injuries and are breadwinners, the pedestrian’s family can sue you because they can no longer provide the family with an income. Would your car insurance be enough to cover what the injured party can claim? Would you have other assets in the risk zone if your car insurance could not meet their demand? (Your home, bank accounts, pension plans?)
If your car liability limit is the minimum level in the state of Illinois, it pays a maximum of $ 25,000 to the injured party. This would probably not cover the cost of surgery if they needed it as a result of the injury from the accident. The injured party can seek a lawyer to sue you and your personal assets may be in danger. Or your salary may be garnished to help pay the settlement.
Would you be comfortable with a court withholding money from your paycheck to decide a lawsuit? Or possibly force you to sell your home to settle with the injured party? Would you be comfortable with liquidating your bank accounts to settle with the injured party?
Even worse, if the person dies and leaves a family behind, you have to keep in mind that they are now without their primary employee. This means a huge financial burden for the family, for which a court can hold you accountable.
You can add an umbrella liability policy to give you extra liability protection for a minimal annual cost. Most umbrella insurance starts with a price of $ 150 per year for $ 1 million in coverage. This type of insurance protects your assets from a lawsuit and protects you from unnecessary stress in an unfortunate situation.