Author Box
Articles Categories
All Categories
Articles Resources

Five Reasons Why You May Need A Liability Umbrella Policy?

June 01, 2011 | Comments: 0 | Views: 171

Have you ever wondered if you might need an umbrella policy? What is an umbrella policy designed to protect? What factors should I consider before buying one? The answers to these questions and more are waiting for you inside this article.

As a financial adviser, I often review client insurances for adequacy, cost effectiveness and proper type. One of the most commonly overlooked protections is a personal liability policy or an umbrella. Many people are not quite sure what it is or if they need one.

An Umbrella or personal liability policy is usually an all risk, all peril policy with coverage limits that start at $1,000,000. There are some very specific reasons that you might want to consider purchasing an umbrella and there are also some adjustments that you will want to make to your homeowners and auto insurance if you do.

Reasons To Purchase An Umbrella:

1. Children Driving: One of the simplest reasons to purchase a liability umbrella is if you have young children that are learning to drive or are under age 25. This age drivers are the highest risk drivers for a reason. They are inexperienced, easily distracted (friends, cell phones, texting, etc.) and statistically are involved in more accidents than any other age group. An umbrella policy will cover them all and protect you from losing everything if one of your children happens to cause a serious accident.

2. Assets To Protect: Most homeowner and auto policies have a maximum liability coverage of $500,000. But if you have assets in excess of this amount, you are exposed to a potentially higher liability problem if someone decides to sue you. Maybe you were involved in a car accident or someone slipped on your property, etc. If they sue you for more than the $500,000 and win, it will come out of your pocket or you may have to sell some assets. If your net worth is over this limit, consider purchasing an umbrella policy for the appropriate amount.

3. High Profile Income or Career: Another reason to consider is if you are in a high-profile profession where incomes are typically high. Someone may think that you are wealthier than you are just because of your title or profession and may be more inclined to sue for a larger amount.

4. Litigious Society: Today we live in an extremely litigious society. Lawyers are suing for larger and larger amounts and if you bear any liability, they are winning. Even if you are not liable, the legal defense fees are expensive. Some say that having a million dollar umbrella causes attorney's to sue for more. This may be true, but if you need the protection, it is better to buy the policy and hope you never use it, than it is to need it and not have it.

5. Cost Savings Adjustments: If you decide to purchase an umbrella, you can reduce your overall cost by doing the following. First reduce your homeowners and auto liability limits to their minimum allowed. This may be $100,000 instead of $500,000 and this will save you some premium dollars to offset the cost of the new policy. Next consider increasing your deductible amounts from $100 to $500 or $1,000. This will also reduce your premiums, but remember that if you make a claim, your new higher deductible will cost more.

Summary: For many families today, young drivers, increasing net worth and higher incomes make personal liability protection a necessity rather than an option. The additional cost is not outrageous, usually $300 to $800 annually and if you make some adjustments to other policies, you can possibly cut your extra out-of-pocket cost in half. Make sure that when you look at your overall financial situation and your risk management strategies, you carefully consider this one.

To discover additional financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.

Keith Maderer is a financial expert and has been a investment and tax adviser in the Western New York area for over 30 years. He is the owner of SENIOR Financial and Tax Associates and the founder of the Maderer Foundation, a private scholarship program.

Keith is also the author of "How To Get Your College Education For Less". Available on - ISBN No: 978-1-4538-2053-7.

You can get your FREE Wealth Expansion Kit, or check out his blog by visiting

Source: EzineArticles
Was this Helpful ?

Rate this Article

Article Tags:

Umbrella Policy


Liability Policy



Auto insurance is probably one of the most expensive insurance types in Canada. An average car insurance policy in Canada costs approximately $1,200 per year and in Ontario, the largest Canadian

By: Alex Saltykov l Insurance > Car Auto l July 09, 2013 lViews: 553

Your house is often your largest investment that you need to protect via insurance. We created a list of multiple savings tips related to Home insurance and hope that these will help you to save a

By: Alex Saltykov l Insurance > Home Owners Renters l December 27, 2012 lViews: 380

Most auto insurance companies design specific car insurance policies for classic and antique cars. If you think you have a classic car and want classic car insurance, you will need to be sure that

By: Richard l Insurance > Car Auto l October 17, 2012 lViews: 570

Business Overhead Expense Insurance Plans can provide cash flow to the business in the event of a disability to a key employee or owner. For a small, growing company it might make the difference

By: T. Spencer White l Insurance > Disability l July 17, 2012 lViews: 243

Workers compensation costs are rising. According to a recent report by the Workers Compensation Research Institute (WCRI), indemnity costs per claim (the loss of earning capacity, payments for lost

By: Kelly C. Williams l Insurance > Workers Compensation l July 08, 2012 lViews: 221

One of the most helpful government programs out there is the SSI Disability program. A person that is legitimately disabled, and cannot work to provide an income for themselves for their family

By: Oleg Winter-Burnett l Insurance > Disability l July 04, 2012 lViews: 282

This article covers five things you should know about liability insurance. From commercial general liability insurance for your business, to professional liability insurance for providers of

By: Darryl William DeLongl Insurance > Umbrellal June 04, 2012 lViews: 191

Professional indemnity insurance is a type of business insurance that protects professionals when they are threatened with legal action as a result of negligence, act of omission or error. There are

By: Kayla C Rosebyl Insurance > Umbrellal May 02, 2012 lViews: 171

Few Australians have the financial resources to cover the expenses of life's unexpected hazards, and yet too many don't have a plan in place that will protect their financial security and lifestyle

By: Liz Ernstl Insurance > Umbrellal January 30, 2012 lViews: 210

Do you have a Personal Umbrella Insurance Policy? Why not? If you own a home or rental property, have money in the bank (whether in cash, retirement accounts or trust), or have a decent paying job

By: Wayne Mccormickl Insurance > Umbrellal November 04, 2011 lViews: 184

What is an Umbrella? We immediately envision a water proof canopy to hold over ourselves during a rainstorm. I like to picture those nice size ones that not only protect your head and shoulders, but

By: Vicki Myersl Insurance > Umbrellal September 21, 2011 lViews: 152

A car can be a lethal weapon. In just a matter of seconds your life could go from feeling financially independent to being afraid of losing everything. In my 26 years of being in the insurance

By: Larry W Freudenbergl Insurance > Umbrellal September 18, 2011 lViews: 165

So you would like to retire... but don't feel that you're able to at the present time. For most people, a successful retirement requires advance planning, good life choices and careful thought about

By: Keith Madererl Investing > Retirement Planningl February 20, 2012 lViews: 133

A growing number of individuals and businesses are accumulating sizable digital estates. Participation in Facebook, Twitter, YouTube, your own Blogs and Websites, even email all create digital

By: Keith Madererl Finance > Estate Plan Trustsl January 22, 2012 lViews: 154

Umbrella policies are an extra policy that covers over and above your homeowner and/or automobile insurance coverages. But some people think that they are all risk and all peril policies that cover

By: Keith Madererl Insurance > Umbrellal August 30, 2011 lViews: 172

A good income tax adviser can save you a lot more than they will charge for the preparation of your tax forms. But you need to find one that is willing to listen to your thoughts and offer ideas that

By: Keith Madererl Finance > Taxes Toolsl August 29, 2011 lViews: 172

Umbrella policies can be a great addition to your protection package, but make sure that you know what they will and will NOT cover. Just because you purchase the excess liability policy, doesn't

By: Keith Madererl Insurance > Umbrellal June 21, 2011 lViews: 170

Many employees today are using their own resources to provide certain miscellaneous items that help their employer's business run more efficiently. Unfortunately these expenses are not being

By: Keith Madererl Finance > Taxes Toolsl May 31, 2011 lViews: 140